New Delhi: Are unrecognised political parties increasingly becoming fronts for money-laundering and tax evasion? Flagging these concerns, the Association of Democratic Reforms (ADR) has called for income tax scrutiny of such parties, especially those that do not contest elections but declare voluntary contributions.According to an ADR report, 2,099 political parties were registered with the Election Commission of India (EC) as on April 13, 2018, out of which 97% (2,044) were unrecognised. Incidentally, only 5% of these unrecognised parties submitted their donation reports to the EC between 2013-14 and 2015-16.As per EC norms, “Either newly registered parties or those which have not secured enough percentage of votes in assembly or general elections to become a state party or those which have never contested in elections since being registered are considered unrecognised parties”.According to analysis in IndiaSpend, one-fourth, or 1,786, of these unrecognised parties are in Uttar Pradesh. The report also found a “lucrative political economy” revolving around elections, with “sundry small parties using elections to evade taxes, reroute black money and make quick bucks by coercing serious candidates to pay for withdrawing their candidates.”Backing this up, ADR, which released a report on Wednesday, pointed out that “political parties are completely exempted from paying income tax as long as they file their tax returns and submit details of donations received above Rs 20,000 to the ECI, annually. Even if the parties declare that they have not received any amount above Rs 20,000 from a single donor, they would still enjoy tax exemption. Thus, political parties, once registered with the ECI, irrespective of their status of recognition, can continue to collect donations and enjoy tax exemption, if they satisfy the above two conditions”.The report noted that between 2013-14 and 2015-16, unrecognised parties in Rajasthan declared the highest amount of donations – Rs 10.79 crore – followed by parties from Telangana with Rs 3.82 crore and Haryana with Rs 2.74 crore.Among the unrecognised parties that declared the highest donations, ranging from Rs 3.7 crore to Rs 2.3 lakh, are the Indian Peoples Green Party, the National Unionist Zamindara Party and Shining India Party in Rajasthan, Rashtriya Ahinsa Mancha in West Bengal, Dharmarajya Paksha in Maharashtra, Lok Satta Party in Telangana, Aarakshan Virodhi Party and Haryana Lokhit Party in Haryana.The ADR report also pointed out that the National Unionist Zamindara Party, registered in Sri Ganganagar, Rajasthan, which declared that it had received donations amounting to Rs 3.7 crore during 2013-14, declared voluntary contributions amounting to Rs 11.56 crore during 2014-15 and Rs 6 lakh during 2015-16 in its audit report, but its contribution reports were not available in the public domain.“Regulation of registration of political parties is crucial to avoid money laundering, corrupt electoral practices and abuse of money power,” said the ADR, suggesting that the EC should impose strict norms for the registration of an association of persons as a political party apart from taking the stringent step to de-recognise those parties that fail to adhere to the rules.In 1999, the EC had issued notices to more than 200 political parties which were registered till 1995 but failed to contest any elections. Notices to those parties which were returned undelivered or parties which failed to respond were deleted from the list of registered parties, which added up to 150. Similarly, 255 political parties were ‘de-listed’ in 2016 as they were not active in the political process.