[Opinion] It’s Curtains for Bond

  • Blog|News|Income Tax|
  • 3 Min Read
  • By Taxmann
  • |
  • Last Updated on 23 February, 2024


Meenakshi Subramaniam – [2024] 159 taxmann.com 527 (Article)

Once, an honest politician and a crooked politician accosted each other. Before they could speak, a thief arrived. He said to honest politician: “Give me all your money.” The politician complied. The thief turned to other politician and said: “Give me all your money.” The crooked politician shouted: “Do you know, who I am? I am a politician.” The thief said:”Give me all my money.”

Electoral bonds went into banishment, after the Supreme Court judgement outlawed them, on ground that the Scheme violated the voters’ right to information enshrined in Article 19(1)(a) of the Constitution.

The judgment by the Supreme Court has restored the status quo that existed before the Finance Act, 2017 was passed, in many statutes.

So far, all political parties have bagged Rs.16,518 crores through Electoral Bonds.


James Bond, recently came to India and in his usual style wanted to introduce himself by saying: “The name is Bond, James Bond” but before he could do so he came across people saying: “Bond junked/ scrapped/ousted/removed/abolished/on the mat/struck down/ shown the door etc; etc; And when somebody said: “Bond thrown out of the window, ” James Bond, thought people were referring to him and quietly packed his bags and flew home.

The amusing thing about the bond banishment is that any political party which could get 1% voting share in last election is also wondering from where it would get at least a 1000 rupees bond. Previously, it could hope to get at least a thousand bucks, even if it was a fond hope.


Along with the Electoral Bonds Scheme (EBS), the Supreme Court struck down several amendments that were made in key laws for donations to political parties.
The amendments were made through The Finance Act, 2016, and The Finance Act, 2017, before the EBS was introduced in January 2018. The relevant provisions, changes and new judicial decision are as follows:


Section 13A(b) of The Income-tax Act says that a political party shall not include voluntary contributions as part of its total income, but it is required to maintain a record of all contributions received that are above Rs 20,000. This record must include the name and address of the person who has made the donation.


The Act amended this section to include the words “other than contribution by way of Electoral Bond”.

Also, a new section 13A(d) was added, which required that all donations exceeding Rs 2,000 must be given through certain methods, which included Electoral Bonds.


The court held that exempting political parties from maintaining a record of donations received through Electoral Bonds would violate the right to information of voters under Article 19(1)(a) of the Constitution.

The court struck down both the amendment to Section 13A(b), and the new Section 13A(d).


Prior to the amendment, Section 182(1) placed a cap on the amount of money a company could donate in a single financial year, limiting it to 7.5% of the company’s average net profits during the previous three financial years.

Section 182(3) required a company to disclose any amount contributed to any political party along with the particulars of the amount donated and the name of the receiving party.


This section was amended to remove the cap on the amount of money a company could donate to a political party. Also, only the total amount contributed had to be disclosed and also the company would no longer be required to declare which political party it had sent a donation to, nor the specific amount.


The court struck down this amendment. It was observed that “permitting unlimited corporate contributions authorises unrestrained influence of companies in the electoral process”.

The court held that this violated the right to free and fair elections, and restored the original provision, meant to curb corruption in electoral financing.


Section 29C of the Act requires political parties to prepare a report detailing the donations received by them in a financial year. Parties are required to declare all contributions higher than Rs 20,000 in this report, and specify whether they were received from individual persons or from companies


The Finance Act, 2017, amended the RP Act to include an exception to Section 29C. It said that the requirement to declare all donations in excess of Rs 20,000 would not apply to donations received through Electoral Bonds.


The Supreme Court struck down the amendment, and observed that the original requirement to disclose contributions of more than Rs 20,000 did an effective job of balancing voters’ right to information with the right to privacy of donors, as donations below this threshold were far less likely to influence political decisions.

Click Here To Read The Full Article

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

Leave a Reply

Your email address will not be published. Required fields are marked *

Everything on Tax and Corporate Laws of India

To subscribe to our weekly newsletter please log in/register on Taxmann.com

Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied