EC sets up online portal for parties to file financial statements

New Delhi: The Election Commission on Monday announced an online portal to allow registered political parties file their financial statements, including contribution reports, audited annual account and poll expenditure statement, a move seen as an effort to bring in more transparency in disclosures made by political entities.

The 'Integrated Election Expenditure Monitoring System' is part of the poll panel's "3C strategy" comprising clean up, crackdown and compliance to strengthen transparency and accountability in the political funding and expenditure on which it had been working for a year now under Chief Election Commissioner Rajiv Kumar, sources said.

Political parties not intending to file the financial report through online mode will have to convey the reasons for not doing so in writing and may continue to file reports in hard copy format along with CDs or pen drive in the prescribed formats.

"The Commission will, in turn, publish all such reports online, along with a letter of justification sent by the party for not filing financial statements online," the EC said in a statement. In a letter to the political parties, the Commission said the step has been taken with twin objectives – to overcome difficulties in filing physical reports, and to ensure timely filing in a standardised format. The portal will facilitate the online filing of Contribution Report, Audited Annual Account and Election Expenditure Statement by political parties. These financial statements are required to be submitted by political parties to the Election Commission/Chief Electoral Officers of States/Union Territories, as per the Representation of People’s Act, 1951 and transparency guidelines issued by the Commission, from time to time, over the last many years, the poll panel said.

"The online availability of data is expected to enhance the level of compliance and transparency. In the letter, the EC pointed to the pivotal position of political parties, and stressed that it is incumbent on them to adhere to the principles of democratic functioning and transparency in electoral processes, particularly in financial disclosures," the statement said.

The EC said a comprehensive guiding manual with graphical representations and FAQs has also been sent to the political parties explaining the online module and the process of filing reports online.

To give further guidance on the online filing, the EC would also organise a hands-on training programme for the designated person(s) from various political parties.

Sources said various instances had come to notice where number of political parties had either not filed one or more requisite financial statements or had filed delayed, inadequate or incomplete details, that too in a non-standardised manner.

With the twin objectives of facilitating political parties to overcome the difficulties in physical filing of reports and to ensure timely filing of financial statements in the prescribed formats, the EC has developed IT modules for online submission of financial statements.

The tech-based system is also enabled to receive statements only from the authorised representative of the party, send reminders on the registered mobile number and emails and progressively keep digital records.

Through the online portal, the EC plans to facilitate vigil on misuse of enabling statutory provisions and tax frauds and evasions by parties.

The EC believes that through the latest initiative, it will ensure timely financial disclosures by parties, making voters informed and aware of the financial affairs of the parties.

Amid poor compliance with regulatory financial reporting and certain instances of serious financial impropriety that Commission came across in cases of few Registered Unrecognised Political Parties (RUPPs), in May, 2022 it undertook a drive for enforcing compliance adherence in RUPPs.

As a result, 284 RUPPs were delisted and 253 others were declared inactive -- action was taken against a total 537 RUPPs.

After the Commission expressed concern over misuse of income tax provisions for exemption and non-compliance, the Income Tax Department launched investigation into the affairs of certain RUPPs and conducted nationwide search and seizure operation in September 2022, which led to disclosure of thousands of crores of bogus donations, layering of funds through fictitious entities and other such illegal activities.

To fill certain regulatory gaps, the Commission had proposed reform measures to the Law Ministry through amendments in the Representation of the People Act, 1951.

These proposals include, reducing the reporting limit for cash contributions from Rs 20,000 to Rs 2000, limiting exemption on donation received in cash to lesser of 20 crore or 20 per cent of the total donation received, inserting provision in RP Act for mandatory audit and its filing before the EC, and updating definition of ‘foreign sources’.