SC to Examine Political Parties’ ₹2,000 Anonymous Cash Donation Rule on August 31

The Supreme Court is scheduled to hear on August 31 a plea challenging the validity of a provision in the Income Tax Act that permits political parties to accept anonymous cash donations below ₹2,000.

The matter will come up before a bench comprising Justices Vikram Nath and Sandeep Mehta, according to the apex court’s cause list. On November 24 last year, the court had agreed to examine the plea and sought responses from the Centre and other respondents.

Filed by Khem Singh Bhati, the petition contends that allowing anonymous cash contributions compromises transparency in political funding and undermines the purity of the electoral process. It argues that voters are deprived of crucial information about the sources of political funding, including donors and their motives, affecting their ability to make informed choices.

The petitioner has challenged Clause (d) of Section 13A of the Income Tax Act, 1961, and sought its declaration as unconstitutional. The plea also referred to the Supreme Court’s 2024 verdict striking down the electoral bonds scheme.

The petition seeks directions to the Election Commission to make it a condition for registration of political parties and allocation of election symbols that they do not accept cash donations. It also seeks scrutiny of Form 24A contribution reports and action against parties that fail to disclose complete donor particulars.

The petitioner has further sought directions to the Central Board of Direct Taxes (CBDT) to examine the income-tax returns and audit reports of political parties for the past five years and initiate appropriate action, including tax, penalties or prosecution, for violations.

The plea maintains that anonymous cash donations infringe the voter’s fundamental right to information under Article 19(1)(a) of the Constitution. It argues that greater disclosure is necessary to ensure transparency and accountability in political financing.

The electoral bonds scheme, introduced in 2018 as an alternative to cash donations, was struck down by the Supreme Court in 2024 on transparency and constitutional grounds.