The plea alleges 'huge discrepancy' between the income tax returns and contribution reports filed by political parties.

The Supreme Court is due to hear today, i.e., August 31, a challenge to the legal regime that allows political parties to receive cash contributions below ₹2,000 without the same donor-identification consequences applicable above that level.

In November 2025, the supreme court had taken up the plea seeking direction that political parties must disclose the name and all other particulars of the person paying any amount of money to it and no amount can be received in cash so as to maintain transparency in the political funding.

Justice Vikram Nath led bench had then issued notice on a plea filed by Khem Singh Bhati seeking a mandamus to the Election Commission of India to:

a. scrutinize Form 24A contribution reports of all recognised political parties (National and State), and require them to deposit the amount received by way of contributions for which address and/or PAN number have not been furnished; b. issue notices to the defaulting political parties under paragraph 16A of the Election Symbol Order, 1968 as to why the reserved symbol shall not be suspended/ withdrawn for failure to submit Form 24A contribution reports with full particulars within prescribed period.
c. require that the accounts of all political parties shall be maintained in such form as may be prescribed and audited by independent auditors appointed by it.

The plea also challenges Section 13A(d) of the Income Tax Act, 1961 for being violative of Article 19(1)(a) of the Constitution in as much as receipt of huge amount of money in cash purportedly below Rs 2000 violates the right to information of the voters about the source of fund of the political parties. Section 13A was introduced in the Income Tax Act, 1961 by Taxation Laws (Amendment) Act, 1978, whereby income of a political party, received by way of interest on securities, Income from house property, or income from other sources and any income by way of voluntary contributions are exempted from computation of total income. Sub-section (4B) was inserted in section 139 making it mandatory for all political parties to furnish a return of income.

"The voters have right to information of all the amounts received by the political parties to enable them to cast their votes with full knowledge of the donors and their antecedents. It is only if the voters have information as to the persons who are financing the political party, they would be able to cast their votes rationally and intelligently. The voters have the right to the disclosure of all the information about the political parties which would include the details of the donors before choosing a political party for whom he/ she should cast their vote", the plea filed through Advocate Jayesh Unnikrishnan states.

A further direction to the Election Commission of India 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 political party has been sought. "Direct the Central Board of Direct Taxes to scrutinize the income tax returns and the audit reports filed by the political parties under section 142 and 143 of the Income Tax Act, 1961 for the last five years and initiate 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 plea adds.

The petition has been settled by Senior Advocate Vijay Hansaria, and drafter by Advocates Nandini Rai, Kavya Jhawar, and Aashay Shukla.

In February 2024, a former CJI DY Chandrachud led bench of the Supreme Court had held the 2018 Electoral Bonds Scheme to be unconstitutional. "Electoral Bonds Scheme is Unconstitutional, Union of India has FAILED to establish least restrictive measures of the Electoral Bonds Scheme for political funding..", the CJI had read out from his judgment.

Court had further held the scheme to be violative of Article 19(1) (a) of the Constitution of India. Supreme Court had directed banks to stop issuance of Electoral Bonds. State Bank of India had been further asked to disclose information on electoral bonds issued and cashed out since the court's interim order of Aril 2019 and share with the Election Commission of India within three weeks. CJI Chandrachud had also observed that information on funding of political parties is important for effective democracy as this could lead to a quid pro quo situation where funders are given favours through various means like policy changes etc.

Government had notified the Electoral Bond Scheme in 2018. According to a press release, an Electoral Bond is a bearer instrument in the nature of a Promissory Note and an interest free banking instrument. A citizen of India or a body incorporated in India will be eligible to purchase the bond. The press release further states that electoral bond would be issued/purchased for any value, in multiples of 1,000, 10,000, 1,00,000, 10,00,000 and 1,00,00,000 from the specified branches of the State Bank of India (SBI).

Case Title: DR. KHEM SINGH BHATI vs. ELECTION COMMISSION OFINDIA AND OTHERS

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