The Supreme Court of India has struck down and declared the electoral bonds scheme, which permitted anonymous donations to political parties, as “unconstitutional”.

The verdict was delivered by a five-judge constitution bench led by Chief Justice of India (CJI) D Y Chandrachud, along with Justices Sanjiv Khanna, B R Gavai, J B Pardiwala and Manoj Misra.

Electoral bonds are interest-free financial instruments similar to promissory notes or bearer bonds that individuals or companies in India can purchase for contributing funds to political parties.

These bonds, sold in denominations ranging from Rs 1,000 to Rs 1 crore, are issued exclusively for political donations and are administered by the State Bank of India (SBI).

One of the key features of electoral bonds was the anonymity they provided to donors, allowing them to contribute without disclosing their identities. Moreover, donations made through these bonds were eligible for a 100 per cent tax exemption.

According to CJI Chandrachud, the electoral bonds scheme violates Article 19(1)(a) and is thus unconstitutional.

Additionally, amendments to the Companies Act related to the scheme are also deemed unconstitutional.

Consequently, SBI, which issues electoral bonds, has been directed to cease issuing these bonds immediately.

The court has directed SBI to provide details of political parties that received electoral bonds since 2019 to the Election Commission of India (ECI) by March 6. Subsequently, the ECI is tasked with publishing these details on its official website.