Dear Sir,

The November 2022 BCAJ carried an informative article (Charitable Trusts – Recent Amendments Pertaining to Books of Accounts and Other Documents) and a thought-provoking editorial (Financial Hara-Kiri through Freebies?).

The dichotomy in these two write-ups is glaring:

On page 25, the article (Charitable Trusts) states, “The tightening of reporting requirements of charitable institutions by the tax department is aimed at higher transparency and avoiding mis-utilization”.

On page 8, the editorial states, “The other possible solutions could be, transparency in Electoral Bonds to provide level playing fields .…..”.

Both statements relate to donations. However, per the journal, one donation category (charitable donations) has been made more transparent, while another category (political donations) is stated to lack transparency. As a lay reader, my views and suggestions are as follows.

Electoral Bonds, as an instrument, require minimum or no record keeping by the donor and the donee. These are anonymous donations similar to cash transactions (primary characteristic is not to leave a trail). Given the ‘ease of giving’ and ‘ease of receiving’, the best practices embedded in Electoral Bonds issuances and receipts should be replicated to other streams. For example, to ‘charitable donations’, initially. It can later be extended to other economic transactions (both for corporates and individuals) like ‘Salary Bonds’, ‘Bank Deposits Interest Bonds’, ‘Dividend Bonds’, ‘Goods Purchase Bonds’, ‘Services Purchase Bonds’, ‘Professional Fee Bonds’ etc. Such a system, if adopted, will alleviate the compliance burden, and eliminate reporting across the transaction chain. There will be an overall acceleration in the velocity of transactions given that taxes saved thereby (because nothing will be recorded or reported), will either be spent on consumption or in savings, both of which drive economic growth.

CA Vinayak Pai