Tax Deduction on Electoral Bond Donations to Political Parties Continues for FY 2023-24

In a recent Ruling, the Supreme Court declared the electoral bonds scheme unconstitutional. But it’s essential to note that the tax deduction for donors remain unaffected until an amendment is brought under the Income Tax Act

Tax Deduction on Electoral Bonds: Good news for firms, individuals, and other entities who made donations to political parties through electoral bonds in FY 2023-24! Despite recent legal debates, taxpayers can still claim 100% tax deduction benefits when filing their returns before July 31, 2024, according to an official statement.

This clarification brings relief to many taxpayers who were uncertain about the fate of their deductions after the Supreme Court’s ruling on electoral bonds’ constitutionality. Despite the court’s decision, the tax benefits remain intact for donors.

Since March 2018, a total of 28,030 electoral bonds, amounting to Rs 16,518 crore, have been sold, as reported by the Association of Democratic Reforms (ADR). Notably, the Bharatiya Janata Party (BJP) leads in contributions, receiving Rs 6,566 crore, followed by the Congress with Rs 1,123 crore, and the Trinamool Congress with Rs 1,092 crore.

Rubal Bansal Maini, Partner at Luthra and Luthra, emphasized that until amendments are made in the Income Tax Act, 1961, taxpayers can continue to claim full deductions for contributions made to registered political parties.

While the recent Supreme Court ruling declared the electoral bonds scheme unconstitutional, it’s essential to note that the tax benefits for donors remain unaffected. The court has directed the State Bank of India, the authorized issuer of electoral bonds, to provide details of all purchases made since April 12, 2019, to the Election Commission of India (ECI) by March 6. Subsequently, the ECI will publish these details on its official website by March 13.

In conclusion, taxpayers can proceed with confidence in claiming tax deductions for electoral bond donations, ensuring continued support for political parties while adhering to legal requirements.

To Know the Provisions of Clause (h) of Section 43B of I-T Act CLICK HERE

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