Tax Relief on Electoral Bond Donations remains intact in FY 24

Firms, Individuals and others who have made donations to political parties through electoral bonds in FY24 would still be able to claim the benefits of a 100% tax deduction while filing their returns before July 31, according to an official.

The clarification is significant since numerous taxpayers were in a state of dilemma after the Supreme Court found these bonds unconstitutional.

A total of 28,030 electoral bonds worth Rs. 16,518 crore were sold between March 2018 and January 2024, according to a report by the Association of Democratic Reforms.

The BJP received the most electoral bond contributions of Rs.6,566 crore, followed by Congress with Rs.1,123 crore and Trinamool Congress with Rs.1,092 crore.

Rubal Bansal Maini, the partner of Luthra and Luthra, said:

“Till the time there is no amendment made to the Income Tax Act, 1961 relating to deduction in respect of contributions given by companies or any person to political parties, the taxpayers can claim 100% deduction of the donations so far made to registered political parties.”

The Supreme Court ruled on Friday that the electoral bonds scheme breached the fundamental right to free expression and the Right to Information Act.

The court instructed SBI to provide all data of electoral bonds purchased since April 12, 2019 to the Election Commission of India by March 6.