Presenting the Union Budget 2017+ , Finance Minister Arun Jaitley said that political parties can now receive only Rs 2000 as donation in cash from one source.
For any donation above Rs 2,000, parties will have to disclose the identity of the donor, Arun Jaitley said.
This is a sharp drop from the Rs 20,000 limit that the political parties were so far allowed to receive as anonymous cash donations.
Political parties can receive donations in cheque, electronic mode; electoral bonds to be issued by the RBI.
Jaitley said the government has accepted the Election Commission's recommendation to bring in transparency in political funding and political parties can take donations from donors through cheque and digital payments.
He said as an additional step, the government proposes to amend the Reserve Bank of India Act for issuing electoral bonds that can be bought through cheques and 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.
"Even after 70 years of Independence, there is no transparency in political funding. Most donations are received in cash, and the donors too hesitate to disclose their identity," the finance minister said.
The EC had asked the government, among other things, to bring down this limit of anonymous donation to Rs 2,000.
The Congress has welcomed government's move to cap cash donations at Rs 2,000.
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