The recent Supreme Court verdict deeming electoral bonds unconstitutional has left taxpayers uncertain about their tax deduction claims. With donations exceeding Rs two thousand six hundred sixty-four crore in the financial year 2021-22, individuals and companies are unsure about the validity of their tax deductions for the year 2023-24, which need to be filed by July thirty-one, 2024.
Awaiting Clarification: Tax experts await clarification from the Central Board of Direct Taxes (CBDT) regarding the eligibility of tax deductions for electoral bonds purchased before February fifteenth, 2024. While the bonds purchased in specified months for the fiscal year 2023-24 might have already been encashed, the impact of the SC verdict on tax deductions remains unclear.
Anonymity and Transparency: Although income tax returns end the anonymity associated with electoral bond purchases, concerns persist about the legality of past deduction claims. While taxpayers were not required to disclose the recipient political party’s name, the documents and PAN details needed for claiming deductions negate anonymity.
Refund Possibilities and Dilemmas: Taxpayers who purchased bonds in good faith may seek refunds from the State Bank of India, the designated issuer of electoral bonds. However, complexities arise if political parties return the money based on the SC orders. The lack of clarity regarding tax exemption amidst refund scenarios adds to the dilemma for taxpayers.
Seeking Resolution: Amidst uncertainties, taxpayers await clarity from the tax authorities on the legality of tax deductions for electoral bond purchases made before the SC verdict. As discussions ensue, stakeholders hope for a resolution that upholds transparency and fairness in tax regulations.
