On Monday, in a development that could finally push political funding into the digital age, the Supreme Court issued notice on a public interest petition that asks a straightforward question- in an India where UPI handles Rs. 24 lakh crore in a single month, why are political parties still allowed to accept anonymous cash donations up to Rs 2000?
The Division Bench of Justice Vikram Nath and Justice Sandeep Mehta asked the Centre, the Income Tax department, and the Election Commission of India to file their replies. Senior Advocate Vijay Hansaria, appearing for petitioner Dr Khem Singh Bhati, told the court that the Rs. 2000 cash window has become the perfect escape route for unaccounted money.
The heart of the case is Section 13A(d) of the Income Tax Act. Under this provision, any cash donation of Rs. 2000 or less is completely tax-free for registered political parties and does not require the donor’s name, PAN, or address. Donations above Rs. 2000 must come only through banking channels with full disclosure. The petitioner says this small cash limit is now being exploited on a massive scale: some parties declare almost their entire income as thousands of tiny cash donations below Rs. 2000, so they never have to reveal who actually funded them.
With digital payments now part of everyday life, the petition argues that there is no longer any genuine reason to keep this cash route open. It wants the court to strike down the Rs. 2000 exemption, make the Election Commission re-examine the past donation reports of all recognised parties, and direct the tax authorities to reopen the last five years’ returns wherever the rules appear to have been bent.
The Case will come up again after the government and the Election Commission respond. For now, the very fact that the Apex Court has admitted the matter signals that the days of small, anonymous cash envelopes reaching political party offices may finally be numbered.
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