Supreme Court Questions Anonymous Cash Donations to Political Parties, Calls for Greater Funding Transparency

The Supreme Court of India on Monday sought responses from the Central government, the Election Commission of India (ECI), and several political parties on a plea challenging the validity of a provision under the Income Tax Act that permits political parties to receive anonymous cash donations below ₹2,000. The petition asserts that this exemption allows unchecked cash contributions, undermining transparency in political funding and depriving voters of crucial information about the sources of party funds.

The matter was heard by a bench comprising Justices Vikram Nath and Sandeep Mehta, which issued notices to major political parties, including the Bharatiya Janata Party (BJP) and the Indian National Congress, in addition to the poll panel and the Centre. The Court also questioned why the petitioners had not initially approached the high court. The plea was filed by Khem Singh Bhati and is scheduled for detailed hearing in about four weeks.

The petitioner seeks the striking down of Clause (d) of Section 13A of the Income Tax Act, 1961, which currently exempts political parties from disclosing the identities of donors giving cash amounts below ₹2,000. The plea argues this provision erodes the purity of elections by allowing political parties to receive untraceable funds, thereby violating voters’ fundamental right to information under Article 19(1)(a) of the Constitution. It calls for mandatory disclosure of donors’ names and particulars irrespective of donation size and urges that no cash contributions should be accepted to maintain transparency.

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Further, the plea references the Supreme Court’s 2024 judgment that struck down the electoral bonds scheme on grounds of opacity and emphasizes that permitting anonymous donations contravenes the Court's insistence on transparent political funding. It contends that with advances in digital transactions, anonymous cash donations are no longer justifiable, and the continuation of such provisions facilitates the flow of unaccounted money in politics, undermining democratic accountability.

The case highlights ongoing concerns about the influence of undisclosed financial contributions on India’s electoral process and the demand for comprehensive reforms to ensure political funding transparency. The Supreme Court’s upcoming verdict could potentially reshape rules around political donations, setting stricter norms for disclosure and accountability in electoral financing.

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