The Supreme Court on Monday asked the Centre, the Election Commission of India (ECI), and several political parties to respond to a petition questioning the legality of a provision under the Income Tax Act that permits political parties to receive anonymous cash donations below ₹2,000. The petitioner claims the provision erodes transparency in political funding and deprives voters of their right to make an informed electoral choice.
A bench of Justices Vikram Nath and Sandeep Mehta issued notices after senior advocate Vijay Hansaria, appearing for petitioner Khem Singh Bhati along with advocate Sneha Kalita, argued that the challenge concerns political parties across the country and therefore requires adjudication at the highest level. “The plea concerns all political parties and the funding to them across the country,” Hansaria submitted.
Before issuing notices, the bench initially asked why the petitioner had not approached the high court first. “Let the high court consider this,” the bench remarked. However, it later agreed to hear the matter, listing it for detailed hearing after four weeks.
The petition targets Clause (d) of Section 13A of the Income Tax Act, 1961, which exempts political parties from disclosing the identity of individuals contributing donations in cash up to ₹2,000. According to the plea, this exemption enables circulation of unaccounted money in politics and “undermines the purity of the election process” by concealing the true source and motives of financial contributors.
“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,” the petition states. It adds that the anonymity clause prevents citizens from making a “rational, intelligent and fully informed decision” while voting.
The petition, filed through advocate Jayesh K. Unnikrishnan, seeks multiple directions, including:
- Striking down Section 13A(d) of the Income Tax Act as unconstitutional
- Directing the Election Commission to mandate that no political party may accept contributions in cash
- Making disclosure of the donor’s name and particulars compulsory for every contribution
- Scrutiny of Form 24A contribution reports of all recognised political parties
- Suspension or withdrawal of election symbols for defaulting parties under the Election Symbols Order, 1968
- Requiring all political parties to maintain audited accounts through independent auditors appointed by the Election Commission
- Directing the Central Board of Direct Taxes (CBDT) to scrutinise income-tax returns and audit reports of political parties for the last five years and initiate proceedings wherever violations of Section 13A are found
The plea also cites the Supreme Court’s 2024 judgment that struck down the electoral bonds scheme, arguing that the continued allowance of undisclosed cash donations below ₹2,000 is inconsistent with the Court’s insistence on transparency in political funding.
Given the rise of digital payments, particularly UPI, the petition contends that there is no justification for allowing anonymous cash contributions. “With the advent of UPI revolution in the country, permitting exemption of income received by way of contribution in cash below ₹2,000… can no more be justified and is manifestly arbitrary,” it states.
Notices have been issued to the Centre, the Election Commission, and major political parties including the BJP and Congress. The matter is scheduled to be taken up after four weeks.
