The Supreme Court issued notices to the Union government, the Election Commission of India (ECI), the Central Board of Direct Taxes (CBDT), and other authorities on a Public Interest Litigation (PIL) challenging the legality of tax exemptions granted to political parties for receiving anonymous cash donations below ₹2,000.
A bench headed by Justice Vikram Nath sought responses from all stakeholders and listed the matter for further hearing after four weeks. The petition, filed by Khem Singh Bhati, urges the Court to strike down Section 13A(d) of the Income Tax Act, which exempts political parties from disclosing the identity of donors contributing up to ₹2,000 in cash.
The petitioner has argued that the provision violates Articles 14 and 19(1)(a) of the Constitution, citing that the lack of transparency in such donations compromises the voter’s right to make an informed electoral choice.
According to the plea, anonymous cash contributions—although small individually—collectively create a substantial pool of unaccounted funds that escape public scrutiny.
The petition states, “The exemption prevents voters from knowing the source of political funding and the motives behind such contributions, thereby obstructing them from making rational and fully informed decisions. This practice undermines the purity of the electoral process and affects the transparency and accountability essential for a healthy democracy.”
Apart from seeking the quashing of Section 13A(d), the petitioner has also requested the Court to direct the CBDT to conduct a thorough examination of income tax returns and audit reports filed by political parties for the past five years.
The plea argues that only a comprehensive scrutiny can reveal whether the exemption has been misused to facilitate the inflow of illicit or undisclosed money into political activities.
The petition warns that the current exemption framework enables political entities to receive potentially “tainted or undisclosed” funds without accountability. The absence of donor disclosure, it contends, opens the door to undue influence on political decisions and compromises the integrity of elections.
The Supreme Court’s notice marks a significant step toward revisiting the financial transparency norms applicable to political parties, especially in the broader context of electoral reforms following the recent striking down of the Electoral Bonds Scheme.
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