Electoral Bonds are dead.
Electoral Trusts are still legal.
The Supreme Court struck down the Electoral Bond Scheme in February 2024. Most corporates and advisors assume that closed the door on structured political donations. It didn't. The CBDT Electoral Trusts Scheme 2013 remains fully operative — and is the only legally valid, tax-efficient mechanism for Indian companies to donate to political parties.
How an Electoral Trust works — the money flow
An Indian company donates to the Electoral Trust. Maximum: 7.5% of 3-yr avg net profits (Companies Act §182 cap).
Section 154 (formerly 80GGC) deduction
100% of donation amount deductible from taxable income
Only Indian companies. Not individuals, NRIs, foreign entities, or government companies.
95% Distribution Rule
Must distribute ≥95% of all receipts to registered parties within the same financial year
Incorporated as a Pvt Ltd/Public Ltd + registered under CBDT Scheme
Annual CBDT return: all donors and all recipients disclosed publicly
Parties registered under §29A, Representation of the People Act, 1951.
Section 15 (formerly 13A) exemption
Political parties are income-tax exempt on Electoral Trust receipts
Government companies excluded
Electoral Trusts cannot donate to government-owned companies or entities
Minimum of all receipts must reach registered parties in the same financial year
Corporate donors get a full deduction of the donated amount under Section 154 (formerly 80GGC)
Maximum donation = 7.5% of 3-year average net profits (Companies Act §182)
Supreme Court ruling made Electoral Trusts the only structured corporate donation vehicle
Electoral Bonds vs Electoral Trusts — what actually changed
Electoral Bonds
- ✗Anonymous — donor identity not disclosed to public or EC
- ✗Available to individuals AND companies
- ✗Purchased from SBI; redeemed by parties anonymously
- ✗No cap on total donations
- ✗No transparency requirement
- ✗Supreme Court: violated right to information
Electoral Trusts
- ✓Transparent — all donors and recipients disclosed in CBDT annual return
- ✓Indian companies only (not individuals)
- ✓Trust collects, then distributes 95%+ to parties
- ✓Capped: Companies Act §182 (7.5% of 3-yr avg profits)
- ✓Annual CBDT return filed and publicly accessible
- ✓SC ruling did not affect Electoral Trusts — different mechanism
Does your company need to structure political donations?
An Electoral Trust registration requires coordinating between ROC, CBDT, and your company board.
Common questions
Electoral trusts, statute-cited.
What is an Electoral Trust?+
An Electoral Trust is a trust set up under the Electoral Trusts Scheme 2013 (notified under s.24AA of the Income-tax Act 1961) whose sole object is distributing contributions to political parties. A company can donate to the trust and claim a full deduction for the amount donated; the trust then distributes to registered political parties, and both the donor's deduction and the trust's exemption are statute-backed.
How much can a company donate to an Electoral Trust?+
A company's total political contribution — through Electoral Trusts, directly, or otherwise — is capped at 7.5% of its average net profits of the three preceding financial years, under s.182 of the Companies Act 2013. Contributions must be made in the name of the company by board resolution, and the amount must be disclosed in its profit and loss account.
What tax deduction does the donating company get?+
The company gets a full deduction of the donated amount under s.154 of the Income-tax Act 2025 (formerly s.80GGC of the Income-tax Act 1961) — a 100% deduction, subject to the s.182 cap and to the contribution being made by any mode other than cash. The tool models the deduction against the company's profit to show the effective cost of the donation.
Is the Electoral Trust itself taxed on the donations?+
No — the income of an Electoral Trust, including the contributions it receives and distributes, is exempt under s.15 of the Income-tax Act 2025 (formerly s.13A of the Income-tax Act 1961), provided it distributes in line with the Electoral Trusts Scheme 2013. The trust is a pass-through; the tax benefit is at the donor level.
What does the tool compute for me?+
It computes your s.182 cap (7.5% of 3-year average net profits), the full s.154/80GGC deduction on the donated amount, and the effective after-tax cost of the donation — showing how the 100% deduction offsets the s.182 ceiling. Political contribution rules are disclosure-heavy, so the actual contribution must be routed by board resolution and reported in the accounts.