SC seeks replies on plea against ₹2,000 cash donations to political parties

SC has issued notices to the Centre and the EC on a petition arguing that the Rs 2,000 cash donation limit for political parties undermines transparency in an era of digital payments

The Supreme Court on Monday sought responses from the Centre, the Election Commission of India (ECI) and others on a petition challenging the provision under the Income Tax Act that permits political parties to accept cash donations of up to Rs 2,000. The plea alleges that such contributions undermine transparency in political funding and have become indefensible in the era of widespread digital payments.

 

A two-judge bench of Justice Vikram Nath and Sandeep Mehta agreed to hear the plea. Senior Advocate Vijay Hansaria, who appeared for the petitioner Khem Singh Bhati, argued that financial transparency in political funding is a constitutional right recognised by the apex court in the electoral bonds judgment.

 

What does the petition argue about transparency and tax exemptions?

 

He contended that tax exemptions for political parties depend on the declaration of contributor details, including PAN (permanent account number) and bank information — a requirement that would be meaningless when cash donations are permitted.

 

Section 13A is a special provision permitting tax exemption to political parties. Clause (d) of the provision allows parties to accept donations worth Rs 2,000 in cash.

 

Why does the plea call the cash-donation provision an opaque loophole?

 

Calling this an opaque loophole, the petitioner has pleaded that with UPI (unified payments interface) transactions surpassing Rs 24 lakh crore in June 2025 alone, there is “no rational justification” for sustaining cash-based contributions that facilitate anonymity. The plea also points to discrepancies between income tax returns and contribution reports filed by political parties, alleging that some entities report “nil contributions” while categorising their inflow as membership fees paid in cash.

 

It seeks judicial directions to the Election Commission to audit Form 24A reports filed by all recognised political parties and mandate disclosure of PAN and bank details for every contribution received.

 

What reliefs has the petitioner sought from the Court?

 

Among other reliefs, the petition requests the Court to strike down Section 13A(d) as unconstitutional, direct the Election Commission to penalise parties failing to provide full contributor information, and mandate that all political party accounts be independently audited. The plea also urges the Central Board of Direct Taxes to review tax filings and initiate action against parties violating disclosure norms.