New Delhi: The Supreme Court has issued notice on applications in a pending public interest litigation (PIL) concerning political funding, including a plea for scrutiny of large donations received by little-known parties with limited electoral activity.
A bench of Justices Vikram Nath and Aparesh Kumar Singh passed the order on 15 October in a petition filed by Dr Khem Singh Bhati. The applications seek amendments to the original PIL in court and directions on political parties’ contribution reports, income-tax returns and exemptions.
The original PIL had come before the court seeking transparency on cash donations less than Rs 2,000, on which the court issued notice on 24 November 2025. The latest order formally records notice on five applications, including those seeking to make some amendments to the petition.
Respondents include the Election Commission of India (ECI), the Union of India, the Central Board of Direct Taxes (CBDT) and political parties.
Donations running into hundreds of crores
In his application, argued by senior advocate Vijay Hansaria, Bhati cited media reports and Association for Democratic Reforms (ADR) data to question donations received by several registered unrecognised political parties (RUPPs).
The application said the Satyawadi Rakshak Party received about Rs 330 crore in 2023-24, although it fielded one candidate in the 2024 Lok Sabha election, who lost the deposit. Its expenditure statement reportedly showed Rs 8.48 crore spent on election campaigns and Rs 316 crore on public welfare.
Aam Janmat Party allegedly received Rs 216 crore in 2022-23 and Rs 620 crore in 2023-24. The application also cited Rs 219.69 crore in donations to Swatantrata Abhivyakti Party, Rs 200.69 crore to New India United Party and Rs 191.61 crore to Bharatiya National Janata Dal in 2023-24.
It relied on BBC Hindi’s report of 16 September and a Telegraph Online report dated 18 September, which examined parties whose offices were reportedly shut and whose office-bearers were unavailable or unwilling to comment.
The application also cites a finding of the Association for Democratic Reforms that 73 percent of nearly 2,800 registered unrecognised political parties in India had not published their financial records. Bhati alleged that some parties received substantial contributions despite limited electoral activity and may have obtained tax exemptions without meeting statutory requirements. These are allegations, not judicial findings.
‘ECI, tax dept should produce records’
The petitioner said contribution reports and income-tax returns for four parties were unavailable on the ECI website. He sought directions requiring the commission to produce reports filed by those parties over five years, with details of action taken.
He also asked the Income Tax Department to produce their returns and state whether they had claimed exemptions under Section 13A of the Income Tax Act, 1961.
The application seeks recovery of tax, interest and penalties if the parties were not eligible for exemptions. It also asks for donors’ names, PAN details and addresses, and recovery of tax benefits allegedly claimed by donors.
Bhati cited the ECI’s decisions to delist 334 RUPPs in August 2025 and another 474 in September for failing to meet registration requirements. He argued that their activities and eligibility for tax benefits warranted scrutiny. Delisting alone, however, does not establish tax evasion or prove donations are fictitious.
Challenge extended to 2025 tax law
The original PIL challenged Section 13A(d) of the Income Tax Act, 1961, which permits political parties to receive cash donations up to Rs 2,000 while claiming tax exemption, subject to statutory conditions.
Bhati argued that anonymous cash contributions undermine transparency and violate Articles 14 and 19(1)(a) of the Constitution. He sought disclosure of donor particulars and a ban on cash donations.
After the Income Tax Act 2025 came into force on 1 April 2026, replacing the 1961 law, he sought to amend the petition to challenge Section 12 read with Schedule VIII, entry 1(d), of the new Act, which he says contains a similar provision.
Under the 1961 law, Section 13A(d) allowed political parties to receive cash donations of up to Rs 2,000, while larger donations had to use specified non-cash modes to qualify for tax exemption. The 2025 Act retained this rule under Section 12 read with Schedule VIII, entry 1(d).
The petitioner wants to challenge both provisions (in the initial petition he challenged 1961 law and in amended petition it was the 2025 law), arguing that allowing cash donations undermines transparency, and seeks to make donor disclosure mandatory and prohibit cash contributions altogether.
(Edited by Viny Mishra)
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