It is shocking that when we are celebrating the golden jubilee of the 1973 Constitution of Islamic Republic of Pakistan, the country’s leading political parties are committing its open mockery by not filing their income tax returns, which is a legal obligation. Section 114(1)(ac) of the Income Tax Ordinance, 2001 makes it mandatory for all non-profit organizations, with political parties falling into this category, to file income tax returns.
The Federal Board of Revenue (FBR) has so far allotted National Tax Numbers (NTNs) to only 27 political parties, out of a 130 registered with the Election Commission of Pakistan (ECP). As per data available, only two political parties have filed tax returns for the latest tax year.
How can we expect rule of law in Pakistan, when 128 political parties are committing flagrant violation of Article 5(2) of the Constitution? It is confirmed from the Active Taxpayers List (ATL) of FBR that the three major parties, Pakistan Tehreek-i-Insaf (PTI), Pakistan Muslim League (Nawaz) [PMLN] and Pakistan Peoples Party (PPP), are not included in the list of filers. Shockingly, major political parties have not been filing income tax returns, violating Article 17(3) of the Constitution, which says: “Every political party shall account for the source of its funds in accordance with law.”
In Pakistan, the legislators and political parties openly defy the Constitution and laws framed thereunder with impunity. Article 5(2) of the Constitution says:
Avoiding filing income tax returns to conceal or not disclose sources of funds by the political parties is a flagrant violation of Article 5(2) read with Article 17(3) of the Constitution. It is strange that this remains unnoticed in mainstream print and electronic media. This shows a collective sham commitment to the cause of democratic values and tall claims of “accountability” of all through the Fourth Pillar of State!
FBR is duty-bound to enforce tax laws enacted by the Parliament. It has failed to take to task all the tax-defiant political parties and those legislators who have been violating the command of Article 5(2) of the Constitution to pay their taxes diligently. Majority of the legislators, who are under oath to safeguard the Constitution, are the worst violators; do not either file tax returns or declare laughable incomes, compared to their lavish lifestyles and accumulation of enormous assets.
In India, section 13A of Income Tax Act, 1961 requires political parties to file returns. It confers tax-exemption to a registered political party subject to the following:
The Chief Election Commissioner of India seeks from the Indian Central Board of Direct Taxes detail scrutiny of accounts submitted by political parties. The Central Information Commission of India directs the Income Tax Department to disclose in public interest, details of all providing funds to political parties in their tax returns. With this information in public domain, the Commission ensures transparency in the funding of both small and big parties, besides blocking the flow of black money in the electoral process.
In Pakistan, neither the ECP nor FBR has ever bothered to consider this vital matter. The ECP must also make public, accounts filed by political parties under section 210 of Election Act, 2017 read with Rule 159 of the Election Rules, 2017.
It is pertinent to mention that non-profit organizations (NPOs) were exempt prior to the tax year 2014, when under the new section 100C of the Income Tax Ordinance, 2001, this exemption was converted into 100% tax credit on fulfillment of certain conditions as amended from time to time. Interestingly, all political parties registered with ECP failed to file tax returns being NPOs under section 2(36) of the Income Tax Ordinance, 2001. Before the ECP, political parties do not disclose names of contributors, donors, financiers which can be ascertained by the FBR if returns are filed by political parties.
In 2017, the PMLN received a notice for filing of tax return. The then Finance Minister blocked this move. The more loyal than king Chairman of FBR readily obliged and in the Finance Bill 2017 proposed exemption under clause (143) in Part I, Second Schedule to the Income Tax Ordinance, 2001: “Any income derived by a political party registered under the Political Parties Order, 2002 with the Election Commission of Pakistan.” It was in blatant violation of Article 17(3) of the Constitution. Luckily, it was dropped after resistance from many, both inside and outside the Parliament. Now, all major political parties are defying the law, while making claims that that they want to promote tax culture—the violators are asking others to abide by the law! What a mockery of the Constitution and rule of law. It was observed centuries ago by Aristotle in Politics, “When laws do not rule, there is no constitution.”
The Federal Board of Revenue (FBR) has so far allotted National Tax Numbers (NTNs) to only 27 political parties, out of a 130 registered with the Election Commission of Pakistan (ECP). As per data available, only two political parties have filed tax returns for the latest tax year.
How can we expect rule of law in Pakistan, when 128 political parties are committing flagrant violation of Article 5(2) of the Constitution? It is confirmed from the Active Taxpayers List (ATL) of FBR that the three major parties, Pakistan Tehreek-i-Insaf (PTI), Pakistan Muslim League (Nawaz) [PMLN] and Pakistan Peoples Party (PPP), are not included in the list of filers. Shockingly, major political parties have not been filing income tax returns, violating Article 17(3) of the Constitution, which says: “Every political party shall account for the source of its funds in accordance with law.”
In Pakistan, the legislators and political parties openly defy the Constitution and laws framed thereunder with impunity. Article 5(2) of the Constitution says:
“(2) Obedience to the Constitution and law is the inviolable obligation of every citizen wherever he may be and of every other person for the time being within Pakistan.”
Avoiding filing income tax returns to conceal or not disclose sources of funds by the political parties is a flagrant violation of Article 5(2) read with Article 17(3) of the Constitution. It is strange that this remains unnoticed in mainstream print and electronic media. This shows a collective sham commitment to the cause of democratic values and tall claims of “accountability” of all through the Fourth Pillar of State!
FBR is duty-bound to enforce tax laws enacted by the Parliament. It has failed to take to task all the tax-defiant political parties and those legislators who have been violating the command of Article 5(2) of the Constitution to pay their taxes diligently. Majority of the legislators, who are under oath to safeguard the Constitution, are the worst violators; do not either file tax returns or declare laughable incomes, compared to their lavish lifestyles and accumulation of enormous assets.
In India, section 13A of Income Tax Act, 1961 requires political parties to file returns. It confers tax-exemption to a registered political party subject to the following:
1. maintains such books of accounts and other documents enabling the tax officer to properly deduce the income therefrom;
2. for each such voluntary contribution [other than contribution by way of electoral bond] in excess of INR 25,000, keeps and maintains a record of such contribution and the name and address of the person who has made such contribution;
3. the accounts are audited by the certified chartered accountant; and
4. any donation in excess of INR 2,000 by an account payee cheque drawn on a bank or an account payee bank draft or use of electronic clearing system through a bank account or through electoral bond (that is, cash donation in excess of INR 2000 is not allowed—with effect from assessment year 2018-19.
The Chief Election Commissioner of India seeks from the Indian Central Board of Direct Taxes detail scrutiny of accounts submitted by political parties. The Central Information Commission of India directs the Income Tax Department to disclose in public interest, details of all providing funds to political parties in their tax returns. With this information in public domain, the Commission ensures transparency in the funding of both small and big parties, besides blocking the flow of black money in the electoral process.
In Pakistan, neither the ECP nor FBR has ever bothered to consider this vital matter. The ECP must also make public, accounts filed by political parties under section 210 of Election Act, 2017 read with Rule 159 of the Election Rules, 2017.
It is pertinent to mention that non-profit organizations (NPOs) were exempt prior to the tax year 2014, when under the new section 100C of the Income Tax Ordinance, 2001, this exemption was converted into 100% tax credit on fulfillment of certain conditions as amended from time to time. Interestingly, all political parties registered with ECP failed to file tax returns being NPOs under section 2(36) of the Income Tax Ordinance, 2001. Before the ECP, political parties do not disclose names of contributors, donors, financiers which can be ascertained by the FBR if returns are filed by political parties.
In 2017, the PMLN received a notice for filing of tax return. The then Finance Minister blocked this move. The more loyal than king Chairman of FBR readily obliged and in the Finance Bill 2017 proposed exemption under clause (143) in Part I, Second Schedule to the Income Tax Ordinance, 2001: “Any income derived by a political party registered under the Political Parties Order, 2002 with the Election Commission of Pakistan.” It was in blatant violation of Article 17(3) of the Constitution. Luckily, it was dropped after resistance from many, both inside and outside the Parliament. Now, all major political parties are defying the law, while making claims that that they want to promote tax culture—the violators are asking others to abide by the law! What a mockery of the Constitution and rule of law. It was observed centuries ago by Aristotle in Politics, “When laws do not rule, there is no constitution.”