Supreme Court to Review Anonymous Political Donation

Political Funding

Political funding refers to financial contributions provided to political parties or candidates to support their activities, election campaigns and overall functioning.

Importance of Political Funding

Political funding is essential for political parties to participate effectively in democratic processes, conduct election campaigns and engage in political activities.

Main Methods of Political Funding in India

Political funds may be raised through individual donations, corporate donations, electoral trusts, electoral bonds and other legally permitted contributions.

State/Public Funding of Elections

State or public funding means government provision of funds to parties for election-related purposes; it can be direct or indirect.

Direct Public Funding

Direct public funding means the government directly provides funds to political parties; this is prohibited in India.

Indirect Public Funding

Indirect public funding involves facilities such as free access to media, public places for rallies and free/subsidised transport facilities; regulated forms are permitted in India.

Section 29B, Representation of the People Act, 1951

Section 29B permits political parties to receive voluntary contributions from individuals and companies, subject to statutory restrictions.

Section 29B and Tax Deduction

Contributions to political parties can qualify for a 100% tax deduction for the donor, subject to the applicable provisions of the Income Tax Act, 1961.

Section 29A, Representation of the People Act, 1951

Section 29A deals with registration of political parties with the Election Commission of India.

Section 29A and Electoral Trusts

Only political parties registered under Section 29A of the Representation of the People Act, 1951 can receive distributions from electoral trusts under the applicable framework.

Corporate Political Donations

Corporate funding to political parties is primarily governed by Section 182 of the Companies Act, 2013.

Section 182, Companies Act, 2013

Section 182 governs contributions by companies to political parties and political purposes.

Company Donation Limit Under Slide Framework

Companies may donate directly or indirectly to political parties subject to the statutory conditions applicable under Section 182 of the Companies Act, 2013.

Companies Act, 1956 and Electoral Trusts

Electoral trusts were originally enabled through Section 25 of the Companies Act, 1956; the corresponding provision under the Companies Act, 2013 is Section 8.

Section 8 Company

A Section 8 company under the Companies Act, 2013 is a not-for-profit company formed for specified objectives and may be used in the electoral trust framework.

Foreign Contributions and Political Parties

The Foreign Contribution (Regulation) Act, 2010 generally restricts foreign contributions to political parties.

FCRA

Foreign Contribution (Regulation) Act, 2010 regulates receipt and utilisation of foreign contributions in India.

Foreign Source Under FCRA

The Foreign Contribution (Regulation) Act, 2010 defines foreign sources and regulates contributions from them; amendments have affected treatment of companies with foreign shareholding.

Foreign Shareholding Amendment

Under the amended framework described in the material, a company with foreign shareholding beyond 50% is not automatically treated as a foreign source, subject to applicable legal conditions.

FEMA

Foreign Exchange Management Act, 1999 regulates foreign exchange transactions and is relevant to companies with foreign participation.

Electoral Trust

An electoral trust is a non-profit entity established to collect funds from donors and distribute them to eligible political parties.

Electoral Trusts Introduction

Electoral trusts were introduced in 2013 as a mechanism for more formal and transparent political donations.

Electoral Trusts Scheme

The Electoral Trusts Scheme, 2013 governs the functioning of electoral trusts.

Electoral Trusts Scheme Notification

The Electoral Trusts Scheme, 2013 was notified by the Central Board of Direct Taxes (CBDT).

Central Board of Direct Taxes

Central Board of Direct Taxes (CBDT) is the authority that notified the Electoral Trusts Scheme, 2013.

Section 17CA, Income Tax Act, 1961

Section 17CA of the Income Tax Act, 1961 permits donations to electoral trusts from eligible Indian citizens, companies registered in India, firms, Hindu Undivided Families and associations of persons residing in India.

Electoral Trust Donors

Eligible donors to electoral trusts include Indian citizens, companies registered in India, firms, Hindu Undivided Families and associations of persons residing in India, subject to the applicable framework.

PAN Requirement for Electoral Trust Donors

Resident donors are required to provide their Permanent Account Number (PAN) when making contributions to electoral trusts.

Passport Requirement for Non-Resident Indian Donors

Non-Resident Indian donors are required to provide their passport number when making contributions to electoral trusts.

Electoral Trust Administrative Retention

An electoral trust may retain up to 5% of its funds for administrative expenses under the framework described in the material.

Electoral Trust Distribution Requirement

An electoral trust must distribute at least 95% of the funds received in a financial year to eligible political parties registered under Section 29A of the Representation of the People Act, 1951.

Electoral Trust Renewal

Electoral trusts are required to apply for renewal every three financial years to continue their registration and operations.

Electoral Trusts: Core Purpose

The sole objective of an electoral trust is to collect and distribute contributions to political parties according to the prescribed legal framework.

Electoral Trust Donor Identity

Electoral trust donations are subject to donor identification requirements such as Permanent Account Number (PAN) or passport details.

Electoral Trusts and Cash Donations

The material states that electoral trusts cannot retain/distribute funds in violation of the prescribed framework and identifies cash donations as a prohibited type in the relevant practice question.

Electoral Trusts and Foreign Donations

Foreign donations are restricted under the applicable electoral and foreign-contribution laws.

Electoral Trust Minimum Distribution

95% is the minimum percentage of funds that an electoral trust must distribute to political parties.

Electoral Trust Maximum Administrative Retention

5% is the maximum portion of funds that an electoral trust may retain for administrative expenses under the cited framework.

Electoral Trusts: 95:5 Rule

An electoral trust generally follows the 95:5 rule: at least 95% of eligible funds are distributed to political parties and up to 5% may be retained for administrative expenses.

Electoral Bonds

Electoral bonds were introduced as an instrument through which individuals and entities could donate to registered political parties while maintaining donor anonymity.

Electoral Bond Scheme Introduction

The Electoral Bond Scheme was introduced through the Finance Act, 2017 and implemented in 2018.

Electoral Bond Formal Notification

The electoral bond scheme was formally notified by the Ministry of Finance on 2 January 2018.

Electoral Bond Issuer

The State Bank of India (SBI) was the authorised bank through which electoral bonds were issued and redeemed.

Electoral Bond Purchase

Eligible purchasers could buy electoral bonds singly or jointly with others.

Electoral Bond Redemption

Electoral bonds could be redeemed only by eligible registered political parties through designated bank accounts.

Electoral Bond Eligibility of Political Parties

Only political parties registered under Section 29A of the Representation of the People Act, 1951 that secured at least 1% of the votes in the last general election to the Lok Sabha or Legislative Assembly were eligible to receive electoral bonds.

Electoral Bond Validity

Electoral bonds were valid for 15 days from the date of issuance.

Effect of Expiry of Electoral Bond

An electoral bond could not be used after its 15-day validity period if it had not been deposited.

Electoral Bond Same-Day Credit

If deposited by an eligible political party within the validity period, the bond amount was credited to its account on the same day.

Electoral Bond Objective

The government presented electoral bonds as a means of making electoral funding more transparent and reducing the use of black money while moving toward a digital economy.

Electoral Bond Anonymity

The Electoral Bond Scheme maintained donor anonymity from the public, which became a major constitutional controversy.

Electoral Bond 2022 Amendment

A 2022 amendment introduced an additional 15-day period for purchase of electoral bonds during years in which elections to a State Legislative Assembly were scheduled.

Electoral Bonds Supreme Court Judgment

On 15 February 2024, the Supreme Court declared the Electoral Bond Scheme unconstitutional.

Electoral Bonds and Article 19(1)(a)

The Supreme Court held that the anonymity associated with electoral bonds violated the fundamental right to information under Article 19(1)(a) of the Constitution.

Electoral Bonds and Right to Information

The electoral bond controversy centred on whether voters have a right to know the sources of political funding in order to make informed electoral choices.

Electoral Bonds Constitution Bench

The electoral bond pleas were referred to a Constitution Bench, with the Supreme Court ultimately deciding the matter in 2024.

Electoral Bond Scheme History: 2017

The Electoral Bond Scheme was introduced through the Finance Act, 2017.

Electoral Bond Scheme History: 2018

The Centre formally notified the Electoral Bond Scheme on 2 January 2018.

Electoral Bond Litigation: September 2017

On 14 September 2017, the Association for Democratic Reforms (ADR) moved against the electoral bond scheme before the Supreme Court.

Association for Democratic Reforms

Association for Democratic Reforms (ADR) is a non-governmental organisation that has been involved in litigation and advocacy concerning electoral transparency and political funding.

ADR and Electoral Bonds

ADR challenged the electoral bond scheme on transparency and voter-information grounds.

Common Cause and Electoral Bonds

Common Cause, another non-governmental organisation, also became involved in litigation challenging electoral bonds.

Communist Party of India (Marxist) and Electoral Bonds

The Communist Party of India (Marxist) also filed a petition challenging the electoral bond scheme.

Centre's Defence of Electoral Bonds

The Centre defended electoral bonds as an instrument intended to ensure transparency in political funding and prevent black money from being used in elections.

Electoral Bond Case: 2019

An election panel/affidavit process occurred in 2019 concerning the electoral bond scheme and transparency concerns.

Electoral Bond Case: October 2023

On 16 October 2023, a Supreme Court Bench headed by Chief Justice D. Y. Chandrachud referred the electoral bond pleas against the scheme to a five-judge Constitution Bench.

Electoral Bond Hearing: October 2023

On 31 October 2023, the Constitution Bench commenced hearing the electoral bond petitions.

Electoral Bond Judgment: 15 February 2024

The Supreme Court struck down the Electoral Bond Scheme on 15 February 2024, holding that the anonymity mechanism violated constitutional rights.

Electoral Bond Constitutional Concern

The core constitutional concern was whether anonymous political funding undermines voters' right to information and free and fair elections.

Anonymous Political Donations

Anonymous political donations are contributions where the identity of the donor is not disclosed to the public or relevant authorities in the prescribed manner.

Current Anonymous Cash Donation Case

In November 2025, the Supreme Court agreed to examine a petition seeking prohibition of anonymous cash donations of up to ₹2,000 to political parties.

Petitioner in Anonymous Cash Donation Case

Khem Singh Bhati filed the petition challenging the legal framework permitting anonymous cash donations up to ₹2,000.

Counsel for Khem Singh Bhati

Senior Advocate Vijay Hansaria represented the petitioner; the material also mentions Bhivk Nath and Sandeep Mehta in connection with the matter.

Respondents in Anonymous Donation Case

The respondents include the Election Commission of India, Union Government, Central Board of Direct Taxes and 13 political parties.

Section 13A, Income Tax Act, 1961

Section 13A contains the special provisions relating to income of political parties under the Income Tax Act, 1961.

Section 13A(d), Income Tax Act, 1961

The provision challenged in the material permits political parties to receive cash donations up to ₹2,000 without donor disclosure, subject to the statutory framework.

₹2,000 Cash Donation Threshold

The challenged framework permits cash contributions of up to ₹2,000 to political parties without disclosure of the donor's identity.

Anonymous Cash Donation Loophole

A contributor could allegedly divide a large donation into multiple cash payments of ₹2,000 or less and use different fronts to bypass transparency requirements.

Digital Payments and Cash Donation Argument

The petition argues that in an era of widespread digital payments, permitting anonymous cash donations creates a transparency and traceability concern.

Article 19(1)(a) and Anonymous Political Donations

The petitioner argues that anonymous political donations interfere with voters' right to information under Article 19(1)(a).

Right to Know Political Funding

The petition argues that voters need information about political funding sources to make informed electoral choices.

Free and Fair Elections and Funding Transparency

Transparency in political funding is linked to the constitutional principle of free and fair elections.

Mandamus in Anonymous Donation Case

The petition seeks a mandamus directing the Election Commission of India to scrutinise political parties' Form 24A contribution reports.

Mandamus

A mandamus is a judicial command directing a public authority to perform a legal/public duty.

Form 24A

Form 24A is an annual contribution report submitted by political parties to the Election Commission of India in connection with their voluntary contributions and tax-exemption requirements.

Purpose of Form 24A

Form 24A is used by political parties for reporting contributions and is connected with claiming income-tax exemption on eligible voluntary contributions.

Form 24A and Contributions Above ₹20,000

The material states that Form 24A deals with contributions exceeding ₹20,000 as a transparency measure in political funding.

Form 24A Donor Details

Form 24A contribution reports contain information such as donor addresses and Permanent Account Number (PAN) details where required.

Form 24A Scrutiny

The petition asks the Election Commission of India to scrutinise Form 24A reports filed by recognised national and regional political parties.

Incomplete Form 24A Reports

The petition alleges that some Form 24A reports were incomplete, including missing donor addresses, Permanent Account Numbers and bank details.

Political Party Interest Income

The petition also raises concerns about large amounts of bank interest received by political parties where details of deposits and bank particulars were allegedly not properly disclosed.

Form 24A Filing Deadline

The material refers to 30 September as the cut-off date for submission of the relevant contribution reports.

Communist Party of India (Marxist) Delay

The Communist Party of India (Marxist) allegedly filed its contribution report 43 days after the 30 September cut-off date.

Bharatiya Janata Party Delay

The Bharatiya Janata Party allegedly filed its contribution report 42 days after the 30 September cut-off date.

Indian National Congress Delay

The Indian National Congress allegedly delayed submission of its contribution report by 27 days.

Paragraph 16A, Election Symbols Order

Paragraph 16A of the Election Symbols (Reservation and Allotment) Order, 1968 is invoked in the petition regarding possible action against parties for failure to comply with contribution-report requirements.

Election Symbols and Compliance

The petition asks the Election Commission to issue notices to defaulting parties and examine whether their reserved election symbols should be suspended or withdrawn for failure to submit required reports.

Election Symbols (Reservation and Allotment) Order, 1968

This order governs reservation and allotment of election symbols and contains provisions concerning recognised political parties.

Independent Audit of Political Parties

The petition seeks independent auditing of political parties' accounts by auditors appointed by the Election Commission of India.

ECI-Appointed Auditors

The petition proposes that the Election Commission of India appoint independent auditors to audit political party accounts.