SC seeks govt replieson tax waiver for cash donations to parties

New Delhi: Supreme Court on Monday sought responses from the government, Election Commission of India, Central Board of Direct Taxes, and others on a PIL seeking striking down of a provision that gives tax exemption to political parties on getting anonymous cash donations below ₹2,000.

A bench led by Justice Vikram Nath, while issuing notice to the government and others, posted the petition filed by Khem Singh Bhati for further hearing after four weeks. The petition challenges the validity of Section 13A(d) of Income-tax Act, 1961, which allows political parties to receive anonymous cash donations below ₹2000.

Seeking a direction that the political parties must disclose the name and all other particulars of the person paying any money to it and no amount can be received in cash so as to maintain transparency in the political funding, Bhati alleged that tax exemption to political parties on getting anonymous cash donations below ₹2,000 was violative of Articles 14 and 19(l)(a) of the Constitution of India.


"This lack of transparency deprives voters of the crucial knowledge about the source of political funding including the donors and their motives, preventing them from making a rational, intelligent and fully informed decision when casting their vote. Ultimately, this undermines the purity of the election process and compromises the integrity and accountability of a healthy democracy by allowing the potential influence of undisclosed or tainted money," the petition stated.

Besides, a direction was also sought to the CBDT to scrutinise the I-T returns and the audit reports filed by political parties for the last five years. Thereafter, the tax department initiated appropriate proceedings for levy of tax, penalty and prosecution for failure to comply with the requirements of Section 13A of the Income-tax Act, 1961, read with Section 29C of the Representation of People Act, 1951, the petition added.

A direction should also be given to the poll panel to scrutinise Form 24A contribution reports of all recognised political parties and require them to deposit the amount received by way of contributions for which address and PAN have not been furnished, senior counsel Vijay Hansaria argued. He said with the phenomenal increase in digital payments in India, there is no justification for permitting cash donation up to ₹2,000.

The senior counsel also requested the court to ask the poll panel to prescribe as a condition of registration of political party and allotment of election symbol that no amount can be received in cash by any party.