New Delhi, November 24, 2025 – In a significant move towards enhancing transparency in political funding, the Supreme Court of India on Monday sought responses from the Central government, the Election Commission of India (ECI), and several major political parties on a petition challenging the legality of anonymous cash donations up to ₹2,000 to political outfits.
The bench, comprising Justices Vikram Nath and Sandeep Mehta, issued notices to the Union Ministry of Finance, the ECI, and prominent parties including the Bharatiya Janata Party (BJP) and the Indian National Congress (INC). The matter has been listed for hearing after four weeks, marking a potential turning point in the ongoing battle against opaque electoral financing in the country.
The petition, filed by Delhi-based petitioner Dr. Khem Singh Bhati through senior advocate Vijay Hansaria and advocate Sneha Kalita, targets Clause (d) of Section 13A of the Income Tax Act, 1961. This provision currently exempts political parties from disclosing the identities of donors for cash contributions below ₹2,000, treating such amounts as non-taxable income while shielding them from mandatory reporting under Section 29C of the Representation of the People Act, 1951.
### Key Arguments: A Call for Electoral Integrity
Bhati's plea argues that the exemption creates a "loophole for anonymous funding," severely undermining the democratic process by depriving voters of essential information about who funds political campaigns. It contends that this opacity violates the fundamental right to information under Article 19(1)(a) of the Constitution, as citizens cannot make informed choices without knowing the sources of party financing. The petition further describes the provision as "manifestly arbitrary" in an era dominated by digital payment systems like UPI, which facilitate traceable transactions.
Highlighting the risk of black money infiltration, the plea references the Supreme Court's landmark February 2024 judgment that struck down the electoral bonds scheme – introduced in 2018 as a purportedly transparent alternative to cash donations – for enabling donor anonymity and corporate influence in elections. "The persistence of cash exemptions post-electoral bonds is unjustifiable and facilitates the flow of tainted money into the electoral arena," the petition states, urging the court to declare the clause unconstitutional.
The issue gained urgency from recent filings: In September and November 2024, and August 2025, several political parties submitted incomplete Form 24A contribution reports to the ECI, omitting PAN details or addresses for small cash donations, prompting calls for stricter oversight.
### Sweeping Relief Sought
Beyond striking down the impugned clause, the petition includes a series of far-reaching prayers to overhaul political funding norms:
Ban on Cash Donations: Direct the ECI to make it a condition for party registration and symbol allotment that no cash contributions be accepted.
Mandatory Disclosures: Require political parties to reveal donor names, addresses, and PAN numbers for all contributions, with immediate return of funds for non-compliant reports.
Enhanced Scrutiny: Mandate ECI audits of party accounts by independent auditors and issuance of notices under Paragraph 16A of the Election Symbols (Reservation and Allotment) Order, 1968, to penalize defaulters, potentially suspending reserved symbols.
Retrospective Action Instruct the Central Board of Direct Taxes (CBDT) to review income tax returns and audit reports of political parties for the past five years under Sections 65, 142, and 143 of the Income Tax Act, initiating tax recovery, penalties, and prosecutions where violations of Section 13A or Section 29C are found.
The plea also seeks an interim restraint on parties receiving any cash donations pending the final verdict, emphasizing the need to prevent further erosion of electoral trust.
### Court Proceedings and Initial Observations
During the hearing, the bench initially queried why the petitioner had not approached a High Court first, given the matter's scope. However, after arguments that the challenge pertains to a nationwide policy affecting all registered parties, the court proceeded to issue notices. No interim orders were passed, but the swift issuance of summons underscores the judiciary's growing scrutiny of political finance reforms.
This development comes amid heightened public and judicial focus on clean elections, following the electoral bonds verdict and ongoing debates over the 2024 amendments to campaign finance laws. Activists from organizations like the Association for Democratic Reforms (ADR), though not directly involved here, have long advocated for full donor disclosure to combat the "cash-for-votes" culture.
As responses are awaited, the case could redefine the contours of political accountability in India, potentially closing a key avenue for untraceable funds ahead of future polls. The full implications will unfold when the matter returns to court in December.
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