The electoral bonds saga, once deemed unconstitutional by the Supreme Court, has found its way back into India’s legal framework through an inconspicuous yet audacious move—the new income tax bill, 2025. This legislative manoeuvre raises fundamental concerns about democratic transparency, judicial authority, and the government’s accountability to its citizens.
The Supreme Court’s landmark judgment
On February 15, 2024, the Supreme Court of India delivered a historic verdict, declaring the electoral bonds scheme unconstitutional. A five-judge bench led by Chief Justice D.Y. Chandrachud struck down the scheme, citing that it violated the fundamental rights of citizens under article 19(1)(a) of the constitution—the right to freedom of speech and expression, including the right to information. The court ruled that anonymous political donations enabled a quid pro quo system and compromised electoral transparency.
The judgment was a blow to the ruling government, which had vigorously defended the scheme on the grounds of curbing black money in political funding. However, the court found that the scheme instead facilitated opaque financial transactions between corporate entities and political parties, disproportionately benefiting the party in power.
The dubious inclusion in the new income tax bill
Despite the court’s ruling, the recently proposed income tax bill, 2025, shockingly retains provisions related to electoral bonds under schedule VIII, which deals with ‘income not to be included in the total income of political parties and electoral trusts’. Legal experts have suggested that this could be a deliberate move to keep the door open for a modified version of the scheme, or a blatant defiance of the Supreme Court ruling.
The new bill is meant to replace the 64-year-old income tax act, 1961, simplifying tax structures, but it also preserves loopholes that enable anonymous political donations. The State Bank of India (SBI) had issued electoral bonds worth ₹16,518 crore in 30 tranches before the Supreme Court struck down the scheme. With the new bill’s provisions, the government appears to be laying the groundwork for a future reintroduction of electoral bonds, undermining the judiciary’s authority.
ALERT
Electoral bonds have been mentioned in the new Income Tax Bill’s Schedule VIII which deals with ‘Income not to be included in the total income of political parties and electoral trusts’https://t.co/5zQ2WBe1jh
— CommodoreLokeshBatra (@CommodoreBatra) February 19, 2025
This inclusion raises serious constitutional concerns, particularly in light of the doctrine of colourable legislation. This doctrine states that what cannot be done directly cannot be done indirectly. By embedding electoral bonds within the new tax framework, the government is attempting to circumvent the Supreme Court’s ruling through legislative manipulation. The bill, in essence, seeks to reintroduce a scheme that has already been declared unconstitutional, disguising it within a broader tax reform package. Such a move is an affront to judicial authority and undermines the doctrine of separation of powers.
Moreover, this legislative move also violates the well-established principle that parliament cannot pass a law to nullify a Supreme Court judgment. The Supreme Court has repeatedly held that while parliament has the power to enact laws, it cannot override judicial pronouncements declaring laws unconstitutional. The inclusion of electoral bonds in the new bill is a clear attempt to undo the court’s ruling through legislative backdoor tactics. This blatant disregard for judicial authority sets a dangerous precedent, effectively rendering constitutional checks and balances meaningless.
The case against Nirmala Sitharaman
Last year, Union Finance Minister Nirmala Sitharaman and Karnataka BJP Chief B.Y. Vijayendra were under legal scrutiny regarding the electoral bonds case. An FIR was registered against Sitharaman in Karnataka, alleging extortion under the guise of the electoral bonds scheme. The complaint, filed by Adarsh R. Iyer, co-president of the Janaadhikaara Sangharsha Parishath (JSP), accuses Sitharaman and BJP leaders of illegally extracting funds through the covert assistance of Enforcement Directorate (ED) officials, allegedly benefiting by over ₹8,000 crore.
However, the Karnataka High Court swiftly stayed the probe against Sitharaman, raising concerns about judicial interference in politically sensitive cases. Critics then argued that such legal shields reflect a broader trend of political impunity, wherein high-ranking officials evade accountability while citizens are deprived of transparency in electoral financing.
The larger implications
The government’s quiet attempt to reinstate electoral bonds despite a clear Supreme Court ruling is an affront to constitutional governance. It raises several alarming questions:
- Is the government attempting to override the judiciary through legislative subterfuge?
- How can an income tax bill include a provision that the Supreme Court has explicitly deemed unconstitutional?
- Why is the government adamant about anonymous political donations despite widespread public opposition?
These concerns reflect an emerging pattern of governance where constitutional mandates are disregarded, judicial decisions are undermined, and electoral transparency is sacrificed for political gain.
The electoral bond controversy is far from over. The Supreme Court’s ruling against the scheme was a victory for democratic integrity and transparency, but the government’s persistence in reviving an unconstitutional mechanism under the pretext of tax reform exposes its unwillingness to embrace accountability.
As citizens, we must remain vigilant against such systematic attempts to erode democratic institutions. If left unchecked, this could set a dangerous precedent where judicial verdicts hold no weight, and political funding remains a black hole of corruption. The time for demanding accountability is now—before democracy is reduced to a mere facade.
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