Income Tax News: The Supreme Court’s recent decision declaring electoral bonds unconstitutional has created a dilemma for taxpayers who used these instruments to donate to political parties and claimed tax deductions. The court’s verdict, based on the anonymity provided by these bearer bonds, has left many questioning the validity of their claimed deductions.
Massive Donations via Electoral Bonds
The scale of donations made through electoral bonds is significant. In the 2021-22 financial year alone, over Rs 2,664 crore was donated through this method, constituting a staggering 55.09% of all retail donations to political parties.
Taxpayers Confusion
With the court’s ruling, taxpayers who donated through electoral bonds are unsure about the fate of their claimed tax deductions, especially for donations made in the current financial year (2023-24). The deadline to claim these deductions while filing tax returns is July 31, 2024.
Waiting for Clarity
It is advisable to wait for the Central Board of Direct Taxes (CBDT) to issue clarification on whether deductions can be claimed for donations made in the current year using bonds purchased before February 15, 2024.
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