The Supreme Court has sought responses from the Centre and Election Commission on a plea challenging the legality of anonymous cash donations below Rs 2,000 to political parties. The petition claims such funding harms voter rights and weakens transparency in India’s electoral process.
NEW DELHI: The Supreme Court on Monday asked the Central government, the Election Commission of India, and other concerned parties to respond to a petition that questions the legality of a provision in the Income Tax Act which allows political parties to receive “anonymous” cash donations below Rs 2,000.
The petition argues that this practice seriously affects transparency in elections and weakens democracy. According to the petitioner, when voters do not know who is funding political parties and where the money is coming from, they are unable to make informed and rational decisions while voting.
ALSO READ: Electoral Bonds Unconstitutional | Supreme Court Rejects Anonymous Political Donations
This lack of disclosure, the plea claims, directly impacts the fairness and purity of the electoral process.
The Supreme Court issued notices to the Centre, the Election Commission and other respondents, seeking their replies on the matter.
The petition also demands that the poll panel make it compulsory for political parties, as a condition for registration and allotment of election symbols, that no party should be allowed to receive any donation in cash.
A bench comprising Justices Vikram Nath and Sandeep Mehta stated that the case would be listed for further hearing after four weeks.
At the beginning of the proceedings, the bench questioned senior advocate Vijay Hansaria, appearing for the petitioner Khem Singh Bhati along with advocate Sneha Kalita, on why the matter was brought directly before the Supreme Court instead of approaching the High Court first.
“Let the high court consider this,”
the bench said. Hansaria responded that the issue affects all political parties and their funding across the entire country.
Considering the wider public importance of the matter, the bench agreed to examine the plea and issued notices to the Election Commission, the Centre and other respondents, including major political parties such as the BJP and the Congress.
The petition seeks the striking down of Clause (d) of Section 13A of the Income Tax Act, 1961, terming it unconstitutional. It also refers to the Supreme Court’s landmark 2024 decision that scrapped the electoral bonds scheme, which was earlier introduced as a mechanism to bring transparency in political funding.
“The petitioner is seeking direction that the political parties must disclose the name and all other particulars of the person paying any amount of money to it, and no amount can be received in cash so as to maintain transparency in the political funding,”
the plea, filed through advocate Jayesh K Unnikrishnan, said.
Section 13A of the Income Tax Act provides special tax exemptions to political parties. It allows income from sources such as house property, securities, voluntary contributions and other sources to remain exempt from total income calculations.
ALSO READ: Political Funding In India: Legal And Constitutional Framework For Regulating It
However, Clause (d) of this section permits political parties to receive anonymous cash donations below Rs 2,000, which the petitioner challenges as arbitrary and unconstitutional.
The plea further requests that the Election Commission be directed to thoroughly scrutinise Form 24A contribution reports submitted by all recognised political parties.
It also seeks a direction requiring parties to deposit the amount received through contributions where details such as address or PAN have not been provided by the donor.
Additionally, the petitioner has demanded that the Election Commission issue notices to defaulting political parties under the Election Symbol Order, 1968, questioning why their reserved symbols should not be suspended or withdrawn for failure to submit Form 24A reports with complete details within the prescribed time.
The petition also calls for stricter monitoring of party accounts. It requests that the accounts of all political parties should be maintained in a prescribed format and audited by independent auditors appointed by the Election Commission.
It has further sought directions to the Central Board of Direct Taxes (CBDT) to scrutinise the income tax returns and audit reports filed by political parties under Sections 142 and 143 of the Income Tax Act for the last five years.
The petitioner has urged the CBDT to initiate legal action including tax recovery, penalties and prosecution against political parties that fail to comply with Section 13A of the Income Tax Act read along with Section 29C of the Representation of the People Act, 1951.
Section 29C deals with the mandatory disclosure of donations received by political parties and requires them to declare details of donors contributing above a specified limit.
The petition states that the cause of action arose after political parties filed their contribution and audit reports in September and November 2024 and August 2025, which allegedly contained incomplete details.
The plea said,
“The injury to the public is the violation of the fundamental right to information of the voter, as guaranteed under Article 19(1)(a) of the Constitution. This violation is primarily caused by section 13A(d) of the Income Tax Act, 1961, which allows political parties to receive anonymous cash donations below Rs 2,000,”
It further emphasised that such opacity prevents voters from understanding who financially supports political parties and what interests they represent, directly affecting the democratic decision-making process.
It said this lack of transparency deprives voters of the crucial knowledge about the donors and their motives, preventing them from making an informed decision while casting their vote.
The plea said,
“Ultimately, this undermines the purity of the election process and compromises the integrity and accountability of a healthy democracy by allowing the potential influence of undisclosed or tainted money,”
The petition also highlighted the growth of digital payments in India, pointing out that most transactions now happen through UPI and other electronic modes.
It said,
“Thus, with the advent of UPI revolution in the country, permitting exemption of income received by way of contribution in cash below Rs 2,000 under section 13A(d) of the Income Tax Act, 1961, can no more be justified and is manifestly arbitrary and has no nexus to the object of maintaining transparency in the funding of political parties,”
The plea once again referred to the Supreme Court’s 2024 judgment that struck down the electoral bonds scheme, which was introduced in 2018 as an alternative to cash donations and was projected as a transparency measure in political funding.
The petitioner argued that allowing anonymous cash donations even after the scrapping of electoral bonds defeats the very purpose of ensuring clean and transparent elections.
The matter will now be taken up by the Supreme Court after four weeks, once replies from all concerned parties are submitted, and the court will then further examine whether the impugned provision violates constitutional principles and the voter’s right to know.
Click Here to Read Our Reports on TESLA
FOLLOW US FOR MORE LEGAL UPDATES ON YOUTUBE
