Stressing the need for greater transparency in political funding, Finance Minister Arun Jaitley today said the maximum amount of cash donation by an individual to a political party will be Rs 2,000 -- a sharp drop from the Rs 20,000 amount in cash earlier.
Presenting the Union Budget for 2017-18, Jaitley said that political parties can take donations from donors through cheque and digital payments.
"Maximum amount of cash donation to any political party will be Rs 2,000 from any person," Jaitley said.
The recommendation in this regard, he said, was made by the Special Investigation Team (SIT) on Black Money.
He said as an additional step, the government proposes to amend the RBI Act for issuing electoral bonds.
He said donors can purchase the bonds through cheques and these will be redeemable in the registered account of a political party.
"This reform will bring greater reform in political funding while preventing future generation of black money," Jaitley said.
Meanwhile, a top government official said that anyone transacting in cash above the newly imposed limit of Rs 3 lakh will have to pay a penalty of a similar amount.
“Any individual or firm which pays anyone over this amount will have to pay a 100 per cent penalty of the amount which exceeds this limit,” Revenue Secretary Hasmukh Adhia said.
Adhia also said that apart from the penalty, the expenditure will not be permitted under the Income Tax for companies making such a transaction above the limit.