EC efforts to curb the use of black money in elections

This piece of article was shared with me by my friend Hiral Nandu who is a Chartered Accountant and works for a CA firm in Taxation consultancy.

Political parties to go corporate as Election Commission plan new rules to curb use of black money

In an effort to curb the use of black money in the electoral process, the Election Commission now plans to ask political parties to conduct their finances in a corporate fashion by getting their accounts audited and publishing their audited finance sheets annually. The EC has received a host of such recommendations from the country’s auditing regulator — the Institute of Chartered Accountants of India (ICAI) – and will notify the official guidelines to political parties and financial enforcement agencies like the Income Tax department and the Enforcement Directorate (ED) soon.

“The EC will deliberate upon and take up the final recommendations submitted by the ICAI on May 27 and notify all the stakeholders in this regard. The final recommendations by the ICAI will help in making the electoral process free from use of illegal money power,” an official involved in the drafting of the report said.

The recommendations by the top accounting body in the country come in the backdrop of the EC creating an Election Expenditure Monitoring cell within its establishment last year, which has been vital in the conduct of polls in Bihar last year and five other states recently.

The new cell, with the help of the I-T department, seized and intercepted huge sums of cash in poll-bound states and subsequent action by tax authorities led to the realisation of huge hidden tax.

The ICAI, in its final report, has recommended that “all political parties registered with the Election Commission of India may be mandated to apply accrual basis of accounting (reporting transactions on a real-time basis).”

“Every political party to follow March 31 as uniform financial year and consolidated financial statements be prepared incorporating the accounts of taluka, district and state-level party branch accounts,” the ICAI recommendations suggested, adding that all political parties should follow “a common format for presentation of its general purpose financial statements.”

“It is recommended that political parties must be mandated to get their accounts audited by a firm of Chartered Accountants, as appointed by the Election Commission of India.

The auditors should be appointed by rotation every three years,” the 38-page recommendation report of the ICAI said.

It also recommended that political parties must be mandated to “publish their audited accounts annually, which shall be available for the information and review by the concerned stakeholders and the general public at large within six months of the end of the financial year, on the parties’ website.

“Annual financial statements be also published in English in leading national newspaper and in local language in the leading newspaper of the state,” it said.

All registered political parties must be mandated to file the audited financial statements with the EC, the recommendations said, adding that the PAN number of the contributors of funds to the political party may be sought.

Laws relating to donations to political parties

I wonder if there are laws in our country to identify the donations received by the political parties.

This piece of informative input is received from one of my friend Nishit Zaveri who is a Chartered Accountant and a Senior Asscociate at a Big4 firm.

Under the Income-tax Act, donations (to anyone) is not allowable under Section 37(1) of the Income-tax Act, 1961 (the Act) as it is not for the wholly and exclusively for the purpose of the business. However, there are some case laws where the taxpayer could prove the nexus between the donation and the business purpose. Thus, if the taxpayer can prove the nexus, such donation exp. can be allowed. Apparently, no taxpayer will claim donation to political party as an allowable exp. (as nexus and benefit from such donation cannot be proved before Assessing Officer…J J)

Further, the Act specifically disallows any expenditure incurred by assessee on advertisement in any souvenir, brochure, tract, pamphlet or the like published by a political party by virtue of Section 37(2B) of the Act. Thus, even if such advt. exp. is for the purpose of business still it will not be allowed.

However, the donations are eligible for deduction (50% or 100%) u/s 80G/80GGB/80GGC of the Act (if the trust or political party is approved and registered etc….). Thus, even if it is not allowed while computing profits still the taxpayers gets the benefit under the Act. So if the taxpayer wants to claim deduction on donations made to political party it will have to disclose the information in its return of income. Since the return of income is not a public document the same will not have any problem with respect to association with any party.

Further, the political parties can receive any amount in cash as donation. However, if it does not maintain a record of such contribution and the name and address of the person who has made such contribution, the income received in excess of INR 20,000 in cash will be taxable.

PS Also the companies Act has a limit for donations to political parties but that is only applicable to companiesProvisions of Section 293A of the companies Act restricts a limit of donation to political party to 5% of the profits with some other conditions.

Loopholes in the existing Lokpal bill

The existing Lokpal Bill proposed by the government is quite toothless and has glaring loopholes which make the whole anti-corruption exercise a sham exercise.The whole selection process,powers and member of Lokpal give rise to vested interests and would make it a fruitless bill.The deficiencies of the government version of the Lokpal are

a) Selection of 3 retired judges by the ruling government only to the Lokpal Panel.Gives rise to vested interests,Jan Lokpal advocates selection of any eminent citizen who has fought against corruption.Selection will be made by government,civil society members and judiciary.

b) Bureaucrats outside the purview of the Lokpal Bill,Speaker Power.This is a huge loophole as government bureaucrats have been found to be ringleaders in most corruption scams taking place in the country.The recent CVC case where PJ Thomas was implicated and Supreme Court had to force the government to remove him

c) No Sou Moto Recognition of Legal Cases – Complaints against the Legislature Members can only be made to the Speaker of Parliament who can decide.This makes no sense as Speakers in India have sullied their image with repeated partisanship to their party.Independent and impartial speakers in Indian parliaments are hard to find.Jan Lokpal can take Sou Moto cases

d) No Defence or Foreign Matter Jurisdiction – Again most of the large scams have taken place in Defence Deals.This has happened under the rule of both the main political parties.Bofors,HDW Submarine are some of the bigger Defence Scandals.Lokpal will have no authority to investigate these.The Jan Lokpal version allows investigations into such cases.Exceptions are only allowed in existing cases before judiciary or currently held legislation.It also imposes strict jail terms for corruption cases.

The Jan Lokpal Bill has the power to transform Indian state and system and have a major impact on transperency like the RTI Bill.However there are extremely powerful interests opposing this Bill..Hazare alleges the 9 member group of ministers who drafted the proposed draft bill are the most corrupt ministers.A lot of support and pressure is needed from the civil society and citizens to get this to move forward.

Source Indiaagainstcorruption.org

Video by Arvind kejriwal(RTI activist)

Features of Lokpal bill

A look at the salient features of Jan Lokpal Bill:

1. An institution called LOKPAL at the centre and LOKAYUKTA in each state will be set up

2. Like Supreme Court and Election Commission, they will be completely independent of the governments. No minister or bureaucrat will be able to influence their investigations.

3. Cases against corrupt people will not linger on for years anymore: Investigations in any case will have to be completed in one year. Trial should be completed in next one year so that the corrupt politician, officer or judge is sent to jail within two years.

4. The loss that a corrupt person caused to the government will be recovered at the time of conviction.

5. How will it help a common citizen: If any work of any citizen is not done in prescribed time in any government office, Lokpal will impose financial penalty on guilty officers, which will be given as compensation to the complainant.

6. So, you could approach Lokpal if your ration card or passport or voter card is not being made or if police is not registering your case or any other work is not being done in prescribed time. Lokpal will have to get it done in a month's time. You could also report any case of corruption to Lokpal like ration being siphoned off, poor quality roads been constructed or panchayat funds being siphoned off. Lokpal will have to complete its investigations in a year, trial will be over in next one year and the guilty will go to jail within two years.

7. But won't the government appoint corrupt and weak people as Lokpal members? That won't be possible because its members will be selected by judges, citizens and constitutional authorities and not by politicians, through a completely transparent and participatory process.

8. What if some officer in Lokpal becomes corrupt? The entire functioning of Lokpal/ Lokayukta will be completely transparent. Any complaint against any officer of Lokpal shall be investigated and the officer dismissed within two months.

9. What will happen to existing anti-corruption agencies? CVC, departmental vigilance and anti-corruption branch of CBI will be merged into Lokpal. Lokpal will have complete powers and machinery to independently investigate and prosecute any officer, judge or politician.

10. It will be the duty of the Lokpal to provide protection to those who are being victimized for raising their voice against corruption.

Source Ndtv.com, wikipedia, India against Corruption.org

Tobacco problem complex in India

Goverment of India and its role in Tobacco Control
Tobacco addiction is a global epidemic that is increasingly ravaging countries and regions that can least afford its toll of disability, disease, lost productivity and death. It has been recognized as the single biggest causes of preventable death and disability world wide. Every year millions of people die due to tobacco use. By 2030 it is expected to kill 10 million people per year, half of them in the age group of 35 to 60 years. Tobacco use is a growing concern, with statistics which reveal facts where one is compelled to understand and take cognizance of the fact to tackle the problem we need to develop a multi sectoral and integrated approach.

The tobacco problem in developing countries like India is more complex and difficult compared to other parts of the world. India is the second largest producer of tobacco worldwide and ranks fourth in total tobacco consumption. Tobacco and its use are not new to our culture. It is easily accessible and consumed in rural India in various forms - smoking, chewable and snuff - like cheaper cigarette versions like beedis, betel leaves, flavored powder (pan masala and gutka), hookah etc. and is closely related with rituals and social status. Families already grappling with scant resources are pushed further into extreme poverty due to spending on tobacco products or on treating tobacco-related diseases.

As studies reveal 5,500 adolescents start using tobacco every day in India joining the 4 million young people under the age of 15 who are regular tobacco users. India also sees a steady rise in deaths attributed to tobacco every year. From 1.4% of all deaths in 1990 the number is expected to rise to 13.3% in 2020.According to the WHO, India would have the highest rate of rise in tobacco related deaths during this period, compared to all other countries /regions.

The Indian government, the civil society and we as citizens need to urgently take proactive steps to combat this demon.

Anand Kumar from Bihar

Anand Kumar, who founded Bihar's free coaching centre Super 30, thathas helped many to enter the Indian Institutes of Technology (IITs),was conferred Wednesday the state's highest award in education.Anand was given the 'Maulana Abdul Kalam Azad Shiksha Puruskar' byGovernor Devanand Konwar at a function here to mark the education day."I am happy to receive the award for my honest effort to make adifference to people who cannot afford quality education," Kumar toldIANS."The award is special for me. This is a big honour. My own state hasfinally recognized me," he said.Officials said Anand was chosen for his contribution in teachingchildren from poor families and preparing them for the IIT-JEE exams.At his school students get free coaching, lodging and food for ninemonths.The award was instituted by the Bihar government in 2007. It carries acitation and Rs.2 lakh.In the last three years, all 30 students of Super 30 have made it tothe Joint Entrance Examination (JEE). Since 2003, 212 students havemade it to the IITs.Kumar, who himself missed a chance to study at the Cambridge becausehe didn't have enough money, gives full scholarships to every annualbatch of 30 students.They have to pass a competitive test to get into Super 30 and thencommit themselves to a year of 16-hour study each day.Anand, who started the Ramanujam School of Mathematics in 1992,founded the Super 30 in 2002.

Dr. Sunitha Krishnan - Co-Founder Prajwala- Very Inspiring

BOB ABERNETHY, anchor: We have a strong and disturbing story today about sex trafficking and the courageous work of one woman in India who is rescuing young children from forced prostitution. Estimates of the number of young girls sold for sex across international borders go up to nearly two million a year, not counting those tricked or kidnapped into prostitution within their own countries. Fred de Sam Lazaro reports today from the southern India city of Hyderabad.

FRED DE SAM LAZARO: She's stands barely taller than these children, but to them Dr. Sunitha Krishnan is a towering figure -- big sister, mother, and school principal rolled into one. Their faces betray few outward signs of the trauma these children have endured. Every child at this transition center is HIV positive. They weren't born that way. They were infected as a result of rape or incest.

Dr. SUNITHA KRISHNAN (Co-founder, Prajwala): I don't know what their future is. I know what their present would be, and for me it's one day at a time right now. And my effort is to see that their smiles are restored everyday, and I can sustain their smiles.

DE SAM LAZARO: But beneath her smile lies a deep anger that propels Krishnan. It began when, as a teenage social activist, she was gang-raped.

Dr. KRISHNAN: The rape per se was not so much of an issue for me. I don't know, for some reason I was never traumatized by that, the fact that I was raped. But what happened after that made me think [about] the way my family treated me, the way the world treated me, the way people around me treated me. The sense that thousands and millions of children and young people are being sexually violated and that there's this huge silence about it around me angers me. This huge normalization of that angers me.

DE SAM LAZARO: Krishnan began working to combat sexual violence in what she says is its most pervasive form -- prostitution. After getting a doctorate in social work, she and a Catholic brother, who died in 2005, founded Prajwala, which means "eternal flame." It is dedicated to removing -- she says rescuing -- women from brothels. It begins with helping their children. In 1995 she started a school with five children. Today, aside from this boarding school for HIV positive kids, Prajwala runs 17 schools across the city of Hyderabad with 5,000 children.

Dr. KRISHNAN: If this facility was not here today perhaps most of the girl children would be inducted into prostitution.

DE SAM LAZARO (to Dr. Krishnan): Even at this age?

Dr. KRISHNAN: I would say eight or nine. The older children that you saw on the other floor are children who would have been easily procured for prostitution and most of the boys, right from the age of six or seven perhaps, would be pimping for their mothers.

DE SAM LAZARO: She says about two million people are trafficked each year within India or from neighboring countries. Most are inducted into the sex trade at age 10 or even earlier, usually destined for big cities and tourist areas. Prajwala has developed a network of informants in the sex industry to help conduct what have become trademark brothel raids. Most of the young women rescued are already veterans of the trade. Many are actually very reticent.

Dr. KRISHNAN: There's so much desensitization that has happened, so much normalization of exploitation that has happened, so much internalization of trauma that has happened. Most of the time, you know, they develop some very close attachments, and they will any day go back. Some of them would any day go back to their pimps or procurer than rather be with us.

DE SAM LAZARO: In fact many do go back to a life that's become normal, a familiar routine. But Prajwala has managed to coax 1,500 women out of prostitution. Peer counselors like 20-year-old Malini play a critical role.

MALINI (Peer Counselor, Prajwala, through translator): When we get the girls, they cry a lot. I ask why, and I tell them my own story, that this is what happened to me and I don't want the same to happen to you.

DE SAM LAZARO: Malani's story is typical. There was abuse, poverty, and despair in her home. A seemingly helpful adult friend, often it's a relative, offered the young daughter work in the big city. Instead, says Malini, she was sold into a brothel. The price the brothel paid for her then became the price she would have to pay for her freedom, paid from her brothel earnings. The accounting is elastic and entirely dictated by pimps or madams, as she found out months into her servitude.

MALINI (through translator): One day they told me, "There's a small balance, and when you pay it off you'll be free to go." I asked how much, and they said 200,000 rupees. I got frightened. I said, "Why 200,000? I've been here so many months, and you've earned so much money from me." They just beat me, so I ran away.

DE SAM LAZARO: But running to the police in a city she didn't know, she encountered only more violence.

MALINI: When we asked the police, "Why are you hitting us?" they said "because you do this immoral work." And I said, "Well, why are you catching us? You should go after our house madams, not us." But they just beat us some more.

DE SAM LAZARO: Official corruption has decreased in recent years. Prajwala's rescue raids are now conducted with the police. At least part of this is due to pressure from Washington. The U.S. Justice Department publishes an annual T.I.P. or Trafficking in Persons report. Countries that show no improvement in cracking down run the risk of some trade sanctions.

Dr. KRISHNAN: At one level it irritates me to no end that my country would require somebody else from outside to tell them that this is a problem. That's not the right way to go about it.

DE SAM LAZARO: At the same time, she's not shy in telling the U.S. and others what to do. Twenty-five percent of sex tourists in Asia are American, she says.

Dr. KRISHNAN: So one needs to ask questions in America also about why American people want small children to have sex with, and that if they don't get it in their own countries, they seek it out in countries like Sri Lanka and India and Philippines. You're about imposing sanctions on India, but have you also thought about imposing sanctions on your own country?

DE SAM LAZARO: Krishnan says Washington has laws against sexual predators, even those that offend abroad. But she says it doesn't enforce them enough. In India, her advocacy has strengthened laws to counter trafficking and to protect victims. Prajwala's rescue raids are now conducted in many of the country's major prostitution areas.

Dr. KRISHNAN: Most of these girls have spent many years in flesh trade, and this is a kind of a transit shelter.

UNIDENTIFIED WOMAN (through translator, lecturing to group of children): You're not old yet, and at your age girls should remember a few important things: the way you dress, your behavior. How should that be? It should be acceptable to others. For example, the way you walk.

DE SAM LAZARO: It will take months with lectures and skits to unlearn the sexualized behavior and demeanor they've acquired.

Dr. KRISHNAN (speaking in Hindu to group of girls): Hey girl, where are you going? Come here. How much do you want?

First, tell me, why did all of this happen?

UNIDENTIFIED GIRL: If a girl's good looking, people will make comments like that.

Dr. KRISHNAN (to unidentified girl): Do you think this happens to regular women?

UNIDENTIFIED GIRL: No, it's because of the way we're dressed. That's why they are saying that.

DE SAM LAZARO: Young women like 19-year-old Abbas Bee are trained in traditional life skills and quite untraditional occupational ones. The goal is to find good-paying jobs, jobs rarely held by women in India. Prajwala itself runs a printing and metal workshop and that helps pay for its work, along with grants from UNICEF, Catholic Relief Services, and others.

Dr. KRISHNAN: We have trained young girls as welders, as carpenters, as printers, as bookbinders, as screen printers, as taxi drivers and auto drivers. We also train them as housekeepers to work in hotels and hospitals and things like that.

DE SAM LAZARO: Their earnings make women like Abbas more eligible as brides, even though she, like perhaps 25 percent of women here, is HIV positive.

ABBAS BEE (Through Translator): I want to get married to a very kindhearted man, and I definitely want an HIV positive man, because I don't want to ruin somebody's life. He should be caring. If he is sick, I'll take care of him, and if I'm sick, he'll take care of me.

DE SAM LAZARO: If she does get married, her wedding, like many others, will happen at Prajwala.

Dr. KRISHNAN: At any given point of time there is somebody pregnant, somebody delivering or somebody -- something's happening. So from birth to death, birth to death, we are the only linkage.

DE SAM LAZARO: She tries to reconcile these women with their families, but for many Prajwala is the only family they know. It's a daunting parental role for the 34-year-old Krishnan, one for which she calls deeply on her faith.

Dr. KRISHNAN: I am a practicing Hindu. I have this deep-rooted belief that my life is a providence by itself, and God has brought me in this world to do what I'm doing, and God will allow me to stay in this world so long as he believes that my mission is not done, and therefore I do believe that the day God believes that my work is done, I'll be killed or I'll die naturally, or whichever way that is possible.

DE SAM LAZARO: Prostitution is a very lucrative organized crime she says. She's been beaten up 14 times since starting Prajwala, the price for rescuing thousands of children from what she calls "the world's oldest form of slavery."

For RELIGION & ETHICS NEWSWEEKLY, this is Fred de Sam Lazaro in Hyderabad, India.

http://www.youtube.com/watch?v=jeOumyTMCI8