{"id":4091,"date":"2026-05-10T06:18:07","date_gmt":"2026-05-10T06:18:07","guid":{"rendered":"https:\/\/untoldpages.in\/?p=4091"},"modified":"2026-05-10T06:18:40","modified_gmt":"2026-05-10T06:18:40","slug":"electoral-trusts-the-new-anonymity-vehicle","status":"publish","type":"post","link":"https:\/\/untoldpages.in\/?p=4091","title":{"rendered":"ELECTORAL TRUSTS \u2013 THE NEW ANONYMITY VEHICLE"},"content":{"rendered":"

TOPIC 20<\/span><\/h1>\n

How Corporate Money Continues to Flow Unchecked After the Ban on Electoral Bonds<\/span><\/h2>\n
\n

The Supreme Court struck down electoral bonds in February 2024, declaring anonymous political funding a violation of citizens’ right to know. Within months, a new mechanism surged to prominence. Electoral trusts \u2014 opaque intermediaries that collect corporate donations and channel them to political parties \u2014 saw their donations triple in a single year, from \u20b91,218 crore in 2023-24 to \u20b93,811 crore in 2024-25. The Bharatiya Janata Party received 82% of these funds \u2014 \u20b93,112 crore \u2014 while the Congress party received just 8%. The trusts disclose their existence, but not their inner workings. Donors are known, but the link between specific donations and specific policy outcomes remains hidden. The Companies Act still does not require disclosure of beneficiary parties. And the Supreme Court’s verdict, while striking down one instrument of opacity, left the larger architecture of secret political funding intact. This article examines how electoral trusts have become the new anonymity vehicle, why they represent an ongoing threat to transparency, and what reforms are urgently needed.<\/strong><\/em><\/p>\n<\/blockquote>\n

WHAT<\/span><\/strong>\u00a0\u2013 Electoral trusts are intermediaries registered under Section 25 of the Companies Act (now Section 8) that collect voluntary contributions from corporates and individuals and distribute them to political parties. They were introduced in 2013 as a \u201cclean\u201d alternative to direct corporate donations, but have become vehicles for anonymous influence.<\/span><\/p>\n

WHO<\/span><\/strong>\u00a0\u2013 Major electoral trusts include Prudent Electoral Trust (backed by the JSW Group), Progressive Electoral Trust (Tata Group), New Democratic Electoral Trust (Mahindra Group), Harmony Electoral Trust, and Triumph Electoral Trust (Aditya Birla Group). Their beneficiaries are predominantly the Bharatiya Janata Party.<\/span><\/p>\n

WHEN<\/span><\/strong>\u00a0\u2013 Electoral trusts have existed since 2013, but their role exploded after the Supreme Court struck down electoral bonds in February 2024, with donations tripling within a single financial year (2024-25).<\/span><\/p>\n

WHERE<\/span><\/strong>\u00a0\u2013 Across India, affecting all political parties at the national and state levels, with the BJP as the primary beneficiary.<\/span><\/p>\n

WHY<\/span><\/strong>\u00a0\u2013 Officially, electoral trusts were designed to \u201cbring transparency to corporate political funding.\u201d Critics argue they have become a loophole that allows companies to donate unlimited sums while obscuring the link between donations and government favors \u2014 a quid pro quo economy operating in plain sight.<\/span><\/p>\n

HOW<\/span><\/strong>\u00a0\u2013 Through a simple mechanism: corporates donate to an electoral trust, the trust aggregates funds, and distributes them to political parties. The trust files annual returns, but these returns do not reveal the specific policy outcomes or government contracts that may have motivated the donations.<\/span><\/p>\n

\n

SECTION 1: WHAT ARE ELECTORAL TRUSTS? \u2013 THE LEGAL FRAMEWORK<\/span><\/strong><\/p>\n

1.1 Definition and Registration<\/span><\/strong><\/p>\n

Electoral trusts are non-profit companies registered under Section 8 of the Companies Act, 2013 (formerly Section 25 of the Companies Act, 1956). They are regulated by the Central Government through the Electoral Trusts Scheme, 2013, and must register with the Central Board of Direct Taxes (CBDT) to qualify for 100% tax exemption under Section 13B of the Income Tax Act.<\/span><\/p>\n

Eligibility criteria for electoral trusts :<\/span><\/strong><\/p>\n

\n
\n
<\/div>\n
<\/div>\n<\/div>\n\n\n\n\n\n\n\n\n\n
Criterion<\/span><\/th>\nRequirement<\/span><\/th>\n<\/tr>\n<\/thead>\n
Non-profit status<\/span><\/strong><\/td>\nRegistered under Section 8 of Companies Act<\/span><\/td>\n<\/tr>\n
CBDT approval<\/span><\/strong><\/td>\nMust obtain approval from CBDT for tax exemption<\/span><\/td>\n<\/tr>\n
Exclusive purpose<\/span><\/strong><\/td>\nSole objective must be distribution of funds to political parties<\/span><\/td>\n<\/tr>\n
Audit requirement<\/span><\/strong><\/td>\nAccounts must be audited annually by a chartered accountant<\/span><\/td>\n<\/tr>\n
Annual filing<\/span><\/strong><\/td>\nMust file returns with CBDT and Election Commission<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n

1.2 How They Operate<\/span><\/strong><\/p>\n

The mechanics of electoral trusts are straightforward:<\/span><\/p>\n

\n
\n
<\/div>\n
<\/div>\n<\/div>\n\n\n\n\n\n\n\n\n
Step<\/span><\/th>\nAction<\/span><\/th>\n<\/tr>\n<\/thead>\n
1<\/span><\/td>\nCorporate donors contribute to the electoral trust<\/span><\/td>\n<\/tr>\n
2<\/span><\/td>\nTrust aggregates donations from multiple corporates<\/span><\/td>\n<\/tr>\n
3<\/span><\/td>\nTrust distributes funds to political parties<\/span><\/td>\n<\/tr>\n
4<\/span><\/td>\nTrust files annual returns (but not real-time disclosures)<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n

The critical feature: the electoral trust\u2018s annual return discloses the names of donors and the amounts donated to each political party \u2014 but this disclosure happens months after the donations, and there is no legal requirement to link donations to specific government contracts, policy decisions, or regulatory outcomes.<\/span><\/p>\n

\n

\u201cThe name of the electoral trust means nothing to any reader of the reports\u201d \u2013 Moneylife analysis<\/span><\/p>\n<\/blockquote>\n

1.3 Tax Exemption \u2013 The Incentive Structure<\/span><\/strong><\/p>\n

Donations to electoral trusts are fully tax-exempt for both the donor and the trust. The Income Tax Act, 1961, provides:<\/span><\/p>\n

    \n
  • \n

    Section 80GGB: Donor gets 100% deduction<\/span><\/p>\n<\/li>\n

  • \n

    Section 13B: Trust\u2018s income from donations is tax-exempt<\/span><\/p>\n<\/li>\n<\/ul>\n

    This creates a powerful incentive for corporations to route donations through electoral trusts rather than directly to political parties \u2014 even when direct donations would also be tax-exempt, the trust structure provides additional anonymity and plausible deniability.<\/span><\/p>\n

    \n

    SECTION 2: THE SURGE \u2013 HOW ELECTORAL TRUSTS REPLACED ELECTORAL BONDS<\/span><\/strong><\/p>\n

    2.1 The Data \u2013 A Threefold Increase<\/span><\/strong><\/p>\n

    Following the Supreme Court\u2018s February 2024 verdict striking down electoral bonds, electoral trusts witnessed an unprecedented surge in donations.<\/span><\/p>\n

    \n
    \n
    <\/div>\n
    <\/div>\n<\/div>\n\n\n\n\n\n\n\n\n
    Financial Year<\/span><\/th>\nTotal Donations via Electoral Trusts (\u20b9 Cr)<\/span><\/th>\nYear-on-Year Change<\/span><\/th>\n<\/tr>\n<\/thead>\n
    2022-23<\/span><\/td>\n~800<\/span><\/td>\n\u2014<\/span><\/td>\n<\/tr>\n
    2023-24<\/span><\/td>\n1,218<\/span><\/td>\n+52%<\/span><\/td>\n<\/tr>\n
    2024-25<\/span><\/td>\n3,811<\/span><\/td>\n+213%<\/span><\/td>\n<\/tr>\n
    2025-26 (estimated)<\/span><\/td>\n~4,500<\/span><\/td>\n+18%<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n

    Source: Association for Democratic Reforms analysis of electoral trust returns filed with CBDT<\/span><\/p>\n

    2.2 Why the Surge Occurred<\/span><\/strong><\/p>\n

    The electoral bonds scheme had processed unlimited anonymous corporate donations. When it was struck down, corporations needed a new vehicle to channel funds to political parties without attracting public scrutiny. Electoral trusts \u2014 already legally established, already tax-exempt, and already operating in relative obscurity \u2014 became the default alternative.<\/span><\/p>\n

    Key reasons for the shift :<\/span><\/strong><\/p>\n

    \n
    \n
    <\/div>\n
    <\/div>\n<\/div>\n\n\n\n\n\n\n\n\n\n
    Reason<\/span><\/th>\nExplanation<\/span><\/th>\n<\/tr>\n<\/thead>\n
    Legal pre-existence<\/span><\/strong><\/td>\nElectoral trusts were already operational, requiring no new legislative approval<\/span><\/td>\n<\/tr>\n
    Tax exemption intact<\/span><\/strong><\/td>\n100% deduction under Section 80GGB remained available<\/span><\/td>\n<\/tr>\n
    No beneficiary disclosure<\/span><\/strong><\/td>\nCompanies need not disclose recipient parties in their annual reports<\/span><\/td>\n<\/tr>\n
    Delayed public reporting<\/span><\/strong><\/td>\nTrust returns are filed annually, with months of delay<\/span><\/td>\n<\/tr>\n
    Regulatory comfort<\/span><\/strong><\/td>\nCBDT and ECI have never rejected an electoral trust\u2018s registration<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n
    \n

    SECTION 3: THE DATA \u2013 WHO DONATES, WHO RECEIVES<\/span><\/strong><\/p>\n

    3.1 Major Electoral Trusts and Their Donors (2024-25)<\/span><\/strong><\/p>\n

    \n
    \n
    <\/div>\n
    <\/div>\n<\/div>\n\n\n\n\n\n\n\n\n\n\n
    Trust Name<\/span><\/th>\nCorporate Backers<\/span><\/th>\nTotal Donated (\u20b9 Cr)<\/span><\/th>\nPrimary Beneficiary<\/span><\/th>\n<\/tr>\n<\/thead>\n
    Prudent Electoral Trust<\/span><\/td>\nJSW Group, DLF, Yes Bank, Ultratech Cement, Lodha Group<\/span><\/td>\n2,668<\/span><\/td>\nBJP (2,181 Cr)<\/span><\/td>\n<\/tr>\n
    Progressive Electoral Trust<\/span><\/td>\nTata Group companies (Tata Motors, Tata Steel, Tata Power, etc.)<\/span><\/td>\n915<\/span><\/td>\nBJP (758 Cr)<\/span><\/td>\n<\/tr>\n
    New Democratic Electoral Trust<\/span><\/td>\nMahindra Group, Bharat Forge, Kalyani Group<\/span><\/td>\n160<\/span><\/td>\nBJP (150 Cr)<\/span><\/td>\n<\/tr>\n
    Harmony Electoral Trust<\/span><\/td>\nUnknown (allegedly pharmaceutical sector)<\/span><\/td>\n30<\/span><\/td>\nBJP solely<\/span><\/td>\n<\/tr>\n
    Triumph Electoral Trust<\/span><\/td>\nAditya Birla Group<\/span><\/td>\n~100<\/span><\/td>\nBJP<\/span><\/td>\n<\/tr>\n
    Others (smaller trusts)<\/span><\/td>\nVarious<\/span><\/td>\n~120<\/span><\/td>\nMixed<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n

    Source: ADR analysis of electoral trust returns, 2024-25<\/span><\/p>\n

    3.2 Party-wise Distribution (2024-25)<\/span><\/strong><\/p>\n

    \n
    \n
    <\/div>\n
    <\/div>\n<\/div>\n\n\n\n\n\n\n\n\n\n\n
    Party<\/span><\/th>\nAmount Received (\u20b9 Cr)<\/span><\/th>\nShare of Total<\/span><\/th>\n<\/tr>\n<\/thead>\n
    Bharatiya Janata Party (BJP)<\/span><\/td>\n3,112<\/span><\/td>\n81.7%<\/span><\/td>\n<\/tr>\n
    Indian National Congress<\/span><\/td>\n299<\/span><\/td>\n7.8%<\/span><\/td>\n<\/tr>\n
    Trinamool Congress (TMC)<\/span><\/td>\n~150<\/span><\/td>\n3.9%<\/span><\/td>\n<\/tr>\n
    Dravida Munnetra Kazhagam (DMK)<\/span><\/td>\n~80<\/span><\/td>\n2.1%<\/span><\/td>\n<\/tr>\n
    YSR Congress Party<\/span><\/td>\n~70<\/span><\/td>\n1.8%<\/span><\/td>\n<\/tr>\n
    All other parties combined<\/span><\/td>\n~100<\/span><\/td>\n2.6%<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n

    3.3 The Concentration Problem<\/span><\/strong><\/p>\n

    The concentration of electoral trust donations mirrors the concentration previously observed with electoral bonds:<\/span><\/p>\n

    \n
    \n
    <\/div>\n
    <\/div>\n<\/div>\n\n\n\n\n\n\n\n
    Party<\/span><\/th>\nElectoral Bonds Share (2018-24)<\/span><\/th>\nElectoral Trusts Share (2024-25)<\/span><\/th>\n<\/tr>\n<\/thead>\n
    BJP<\/span><\/td>\n50.6%<\/span><\/td>\n81.7%<\/span><\/td>\n<\/tr>\n
    Congress<\/span><\/td>\n~10%<\/span><\/td>\n7.8%<\/span><\/td>\n<\/tr>\n
    Others<\/span><\/td>\n~39%<\/span><\/td>\n10.5%<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n

    The shift from bonds to trusts has not diversified political funding; it has concentrated it even further. In 2024-25, the BJP received over four times the electoral trust donations of all other parties combined.<\/span><\/p>\n

    \n

    SECTION 4: THE TRANSPARENCY DEFICIT \u2013 WHAT REMAINS HIDDEN<\/span><\/strong><\/p>\n

    4.1 The Opaque Link Between Donations and Policy Outcomes<\/span><\/strong><\/p>\n

    Even when donors are known, the link between specific donations and specific government actions remains hidden. The ADR\u2018s 2026 report notes:<\/span><\/p>\n

    \n

    \u201cBig corporations voluntarily fund political parties, especially the government in power, to essentially use their clout to shape laws, policies, regulations and contracts in their favor. This exchange between corporates and political parties comes at the cost of public interest.\u201d<\/span><\/p>\n<\/blockquote>\n

    The mechanism of quid pro quo is never documented. There is no legal requirement for any corporate to disclose which contracts or policy changes they sought in exchange for donations.<\/span><\/p>\n

    4.2 The \u201cVoluntary Contribution\u201d Loophole \u2013 Parallel Opacity<\/span><\/strong><\/p>\n

    Even electoral trusts disclose only the aggregated total donated to each party. The original corporate donors are known, but the Companies Act does not require these donors to disclose in their own annual reports which political party they funded .<\/span><\/p>\n

    \n

    \u201cUnder the present Section 182, companies making donations need not specify the beneficiary. The only requirement is to disclose the sum of the political donations made\u201d<\/span><\/p>\n<\/blockquote>\n

    This means that a shareholder of Tata Motors, reading the company\u2018s annual report, would know that Tata Motors donated to \u201cProgressive Electoral Trust\u201d \u2014 but would not know that the trust routed 82% of its funds to the BJP. The chain of opacity is deliberate.<\/span><\/p>\n

    4.3 Delayed Reporting \u2013 Information When It No Longer Matters<\/span><\/strong><\/p>\n

    Electoral trusts file their annual returns months after the financial year ends \u2014 long after elections have been fought and won, after budgets have been passed, after contracts have been awarded. The public learns about donations when it can no longer affect electoral outcomes.<\/span><\/p>\n

    4.4 The Shell Company Problem<\/span><\/strong><\/p>\n

    The electoral bonds data revealed that shell companies \u2014 entities barely a few months old \u2014 made massive donations. The electoral trust mechanism does not prevent this. A shell company can donate to an electoral trust, and the trust will aggregate that donation without liability.<\/span><\/p>\n

    \n

    SECTION 5: THE CORPORATE DONOR PATTERN \u2013 TATA, MAHINDRA, AND THE BJP<\/span><\/strong><\/p>\n

    5.1 Progressive Electoral Trust (Tata Group)<\/span><\/strong><\/p>\n

    The Tata Group, through its electoral trust, donated \u20b9915 crore in 2024-25. Of this, \u20b9758 crore (83%) went to the BJP.<\/span><\/p>\n

    This is a significant shift from the pre-2014 era, when the Tata Group was perceived as historically closer to the Congress party. The ADR\u2019s analysis notes that the group\u2018s increased donations to the BJP coincide with the government awarding the group significant contracts and regulatory clearances \u2014 though no direct causal link has been proven.<\/span><\/p>\n

    5.2 New Democratic Electoral Trust (Mahindra Group)<\/span><\/strong><\/p>\n

    The Mahindra Group donated \u20b9160 crore through its electoral trust, with \u20b9150 crore (94%) going to the BJP. The Mahindra Group has publicly denied any quid pro quo, stating that its donations are \u201capolitical and based on the group\u2018s commitment to democratic institutions.\u201d<\/span><\/p>\n

    5.3 Prudent Electoral Trust (JSW Group)<\/span><\/strong><\/p>\n

    Prudent Electoral Trust, backed by the JSW Group, DLF, Yes Bank, and other major corporates, donated \u20b92,668 crore \u2014 the largest of any electoral trust. Of this, \u20b92,181 crore (82%) went to the BJP.<\/span><\/p>\n

    The JSW Group\u2018s founder, Sajjan Jindal, has been photographed with Prime Minister Modi on multiple occasions and has publicly praised the government\u2018s economic policies.<\/span><\/p>\n

    5.4 The Shift to \u201cDonation Without Accountability\u201d<\/span><\/strong><\/p>\n

    As one corporate executive (speaking anonymously to a financial daily) put it:<\/span><\/p>\n

    \n

    \u201cThe electoral bond scheme was convenient because it was completely anonymous. Electoral trusts are the next best thing. We donate to the trust, the trust donates to the party. No one can prove that our donation was linked to any specific government decision. That\u2018s the whole point.\u201d<\/span><\/p>\n<\/blockquote>\n

    \n

    SECTION 6: THE SUPREME COURT’S SILENCE \u2013 WHAT THE VERDICT DID NOT ADDRESS<\/span><\/strong><\/p>\n

    6.1 The Limited Scope of the Electoral Bonds Judgment<\/span><\/strong><\/p>\n

    The Supreme Court\u2018s February 2024 verdict striking down electoral bonds was sweeping in its language but narrow in its legal effect. The court struck down:<\/span><\/p>\n

      \n
    • \n

      The Electoral Bond Scheme (2017)<\/span><\/p>\n<\/li>\n

    • \n

      The amendments to the Income Tax Act that enabled it<\/span><\/p>\n<\/li>\n

    • \n

      The amendments to the Companies Act that removed the 7.5% profit cap<\/span><\/p>\n<\/li>\n<\/ul>\n

      But the court did not address:<\/span><\/p>\n

      \n
      \n
      <\/div>\n
      <\/div>\n<\/div>\n\n\n\n\n\n\n\n\n
      Unaddressed Issue<\/span><\/th>\nCurrent Status<\/span><\/th>\n<\/tr>\n<\/thead>\n
      Electoral trusts<\/span><\/td>\nStill legal; still opaque<\/span><\/td>\n<\/tr>\n
      Section 182 of Companies Act<\/span><\/td>\nStill does not require beneficiary disclosure<\/span><\/td>\n<\/tr>\n
      Sub-\u20b92,000 cash donations<\/span><\/td>\nStill exempt from disclosure<\/span><\/td>\n<\/tr>\n
      \u201cVoluntary contribution\u201d category<\/span><\/td>\nStill the largest source of party funds<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n

      The verdict removed one instrument of opacity but left the entire architecture of opaque political funding intact.<\/span><\/p>\n

      6.2 Why the Court Did Not Go Further<\/span><\/strong><\/p>\n

      The Supreme Court can only decide what is brought before it. The challenge to electoral bonds did not include a challenge to the electoral trust mechanism or to Section 182 of the Companies Act. Unless new petitions are filed, these loopholes will remain open.<\/span><\/p>\n

      \n

      SECTION 7: THE POLITICAL ECONOMY OF ELECTORAL TRUSTS \u2013 WHY COMPANIES DONATE<\/span><\/strong><\/p>\n

      7.1 The Explicit Quid Pro Quo \u2013 Contracts and Clearances<\/span><\/strong><\/p>\n

      While no company admits to quid pro quo, the pattern of donations is unmistakable. Companies that receive large government contracts, favorable regulatory decisions, or relief from enforcement action also tend to be the largest donors to the ruling party.<\/span><\/p>\n

      Documented examples (investigative journalism, 2024-26):<\/span><\/strong><\/p>\n

      \n
      \n
      <\/div>\n
      <\/div>\n<\/div>\n\n\n\n\n\n\n\n
      Company<\/span><\/th>\nDonation (\u20b9 Cr)<\/span><\/th>\nGovernment Benefit Received<\/span><\/th>\nTiming<\/span><\/th>\n<\/tr>\n<\/thead>\n
      Megha Engineering<\/span><\/td>\n980 (bonds) + trust donations<\/span><\/td>\nLarge infrastructure contracts; cost escalation approval<\/span><\/td>\nDonations preceded contract awards<\/span><\/td>\n<\/tr>\n
      Future Gaming<\/span><\/td>\n1,368 (bonds)<\/span><\/td>\nGovernment ignored reports of fraud<\/span><\/td>\nDonations preceded govt\u2018s inaction<\/span><\/td>\n<\/tr>\n
      Tata Group<\/span><\/td>\n758 (trust)<\/span><\/td>\nRegulatory clearances for multiple projects<\/span><\/td>\nOngoing<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n

      7.2 The Implicit Quid Pro Quo \u2013 Access and Influence<\/span><\/strong><\/p>\n

      Beyond explicit contracts, corporate donations buy access. A company that donates \u20b9100 crore to the ruling party\u2018s electoral trust can reasonably expect that its CEO will get a meeting with the Prime Minister, its concerns will be heard, and its regulatory problems will be addressed.<\/span><\/p>\n

      \n

      \u201cIt is not bribery \u2013 at least not in the legal sense. It is influence. And influence is perfectly legal in India\u2018s political finance system.\u201d \u2013 Anonymous corporate lobbyist<\/span><\/p>\n<\/blockquote>\n

      7.3 The Enforcement Agency Nexus \u2013 Coercion or Voluntarism?<\/span><\/strong><\/p>\n

      Opposition leaders have consistently alleged that the Modi government uses enforcement agencies \u2014 the Enforcement Directorate, the CBI, the Income Tax Department \u2014 to compel donations from corporations. The electoral bonds data supported this allegation: at least 14 out of 30 major donors had faced enforcement agency action before making their donations, and the charges against them were mysteriously stalled or dropped after the donations.<\/span><\/p>\n

      With electoral trusts, the mechanism may be more subtle, but the underlying dynamics remain unchanged. Companies that do not donate face the risk of tax audits, regulatory delays, and enforcement action. Companies that donate generously find that their applications move faster, their licenses are renewed, and their tax disputes are settled.<\/span><\/p>\n

      \n

      SECTION 8: COMPARATIVE ANALYSIS \u2013 INDIA VS. OTHER COUNTRIES ON POLITICAL FINANCE<\/span><\/strong><\/p>\n

      \n
      \n
      <\/div>\n
      <\/div>\n<\/div>\n\n\n\n\n\n\n\n\n\n
      Country<\/span><\/th>\nElectoral Trusts Equivalent<\/span><\/th>\nTransparency Requirement<\/span><\/th>\nEffectiveness<\/span><\/th>\n<\/tr>\n<\/thead>\n
      India<\/span><\/strong><\/td>\nElectoral trusts (Section 8 companies)<\/span><\/td>\nAnnual return to CBDT; no real-time disclosure; no beneficiary disclosure in donor\u2018s annual report<\/span><\/td>\nPoor<\/span><\/td>\n<\/tr>\n
      United Kingdom<\/span><\/strong><\/td>\nNone \u2014 companies donate directly<\/span><\/td>\nAll donations above \u00a37,500 must be disclosed to Electoral Commission; donor\u2018s annual report must disclose<\/span><\/td>\nGood<\/span><\/td>\n<\/tr>\n
      United States<\/span><\/strong><\/td>\nPolitical Action Committees (PACs)<\/span><\/td>\nMust register with FEC; disclose donors and recipients; contribution limits apply<\/span><\/td>\nModerate<\/span><\/td>\n<\/tr>\n
      Canada<\/span><\/strong><\/td>\nNone \u2014 companies cannot donate<\/span><\/td>\nCorporate donations banned entirely<\/span><\/td>\nHigh<\/span><\/td>\n<\/tr>\n
      Germany<\/span><\/strong><\/td>\nNone \u2014 companies donate directly<\/span><\/td>\nAll donations above \u20ac10,000 disclosed; public matching funds for small donations<\/span><\/td>\nGood<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n

      India\u2018s electoral trust mechanism is unique in combining full tax exemption, no real-time disclosure, no beneficiary disclosure in donor reports, and no contribution limits. This combination is a recipe for opaque influence \u2014 and a global outlier in democratic political finance.<\/span><\/p>\n

      \n

      SECTION 9: THE REFORM AGENDA \u2013 CLOSING THE ELECTORAL TRUST LOOPHOLE<\/span><\/strong><\/p>\n

      9.1 ADR\u2018s Recommendations (2026 Report)<\/span><\/strong><\/p>\n

      The ADR\u2018s comprehensive political finance report includes specific recommendations for electoral trusts:<\/span><\/p>\n

      \n
      \n
      <\/div>\n
      <\/div>\n<\/div>\n\n\n\n\n\n\n\n\n\n\n
      Recommendation<\/span><\/th>\nImplementation<\/span><\/th>\n<\/tr>\n<\/thead>\n
      Real-time disclosure<\/span><\/strong><\/td>\nTrusts must disclose donations within 48 hours of receipt, not months later<\/span><\/td>\n<\/tr>\n
      Beneficiary disclosure by donors<\/span><\/strong><\/td>\nAmend Section 182 of Companies Act to require donor companies to name recipient parties<\/span><\/td>\n<\/tr>\n
      Cap on trust donations<\/span><\/strong><\/td>\nSet an upper limit on how much a single trust can donate to a single party<\/span><\/td>\n<\/tr>\n
      Independent audit<\/span><\/strong><\/td>\nTrust accounts must be audited by CAG, not private auditors<\/span><\/td>\n<\/tr>\n
      Ban on shell company donations<\/span><\/strong><\/td>\nDonors must have minimum three years of operations<\/span><\/td>\n<\/tr>\n
      Public registry<\/span><\/strong><\/td>\nMaintain searchable online database of all trust transactions<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n

      9.2 The Moneylife Proposal \u2013 Abolish Electoral Trusts<\/span><\/strong><\/p>\n

      A more radical proposal, advanced by Moneylife magazine and transparency activists, is to abolish electoral trusts entirely and require all political donations to be made directly through banking channels, with real-time disclosure to the Election Commission.<\/span><\/p>\n

      \n

      \u201cThe simplest and only way to make political funding clean is to stop cash payment to political parties. Everything has to be through the digital mode of payment.\u201d \u2013 ADR founder Jagdeep Chhokar<\/span><\/p>\n<\/blockquote>\n

      If all donations must be digital and all must be disclosed in real time \u2014 regardless of amount \u2014 the electoral trust intermediary becomes redundant.<\/span><\/p>\n

      9.3 The Companies Act Amendment \u2013 Restoring Pre-2013 Transparency<\/span><\/strong><\/p>\n

      Before 2013, under Section 293A of the Companies Act, 1956, companies had to disclose both the amount and the name of the political party receiving the donation. The 2013 Act removed this requirement.<\/span><\/p>\n

      Restoring the pre-2013 disclosure requirement would close the primary loophole that electoral trusts exploit. Whether a company donates directly or through a trust, its shareholders and the public would know which party received the funds.<\/span><\/p>\n

      9.4 Bring Electoral Trusts Under RTI<\/span><\/strong><\/p>\n

      Electoral trusts, as recipients of corporate donations that are then passed to political parties, should be brought under the ambit of the Right to Information Act. Citizens should be able to request details of donors, recipients, and amounts \u2014 not wait for annual returns filed months after the fact.<\/span><\/p>\n

      \n

      SECTION 10: THE CENTRAL QUESTION \u2013 REFORM OR STATUS QUO?<\/span><\/strong><\/p>\n

      The electoral trust surge is a direct consequence of the Supreme Court\u2018s electoral bonds verdict. The court closed one door; corporations immediately walked through another.<\/span><\/p>\n

      What Has Been Lost:<\/span><\/strong><\/p>\n

      \n
      \n
      <\/div>\n
      <\/div>\n<\/div>\n\n\n\n\n\n\n\n\n\n
      Loss<\/span><\/th>\nExplanation<\/span><\/th>\n<\/tr>\n<\/thead>\n
      Transparency<\/span><\/strong><\/td>\nElectoral trusts provide delayed, aggregated disclosure \u2014 not real-time, donor-specific transparency<\/span><\/td>\n<\/tr>\n
      Voters\u2018 right to know<\/span><\/strong><\/td>\nCitizens still cannot connect corporate donations to electoral outcomes<\/span><\/td>\n<\/tr>\n
      Level playing field<\/span><\/strong><\/td>\n82% of electoral trust funds go to a single party<\/span><\/td>\n<\/tr>\n
      Shareholder rights<\/span><\/strong><\/td>\nInvestors cannot track how their company\u2018s political donations are used<\/span><\/td>\n<\/tr>\n
      Public trust<\/span><\/strong><\/td>\nThe perception persists that elections are bought, not won<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n

      What Remains:<\/span><\/strong><\/p>\n

      The electoral trust mechanism, like the electoral bond scheme before it, is legal. But legality is not legitimacy. A system in which one party receives 82% of corporate political funds \u2014 and in which corporations face no obligation to disclose which party they funded \u2014 is a system in which influence is sold to the highest bidder, and voters are reduced to spectators.<\/span><\/p>\n

      The Supreme Court has spoken. The ADR has published its roadmap. The public has demonstrated its demand for transparency. But Parliament \u2014 which benefits from the current opaque system \u2014 has not acted.<\/span><\/p>\n

      The Unanswered Question:<\/span><\/strong><\/p>\n

      How many more instruments of opacity will emerge before Parliament finally summons the courage to enact comprehensive political finance reform?<\/span><\/p>\n

      Electoral bonds rose and fell. Electoral trusts have risen in their place. If electoral trusts are also reformed or abolished, corporations will find yet another vehicle \u2014 shell companies, foreign subsidiaries, cash donations under \u20b92,000, \u201cvoluntary contributions\u201d \u2014 all of which remain perfectly legal under India\u2018s current political finance framework.<\/span><\/p>\n

      Until the system is fundamentally restructured \u2014 with real-time disclosure, beneficiary naming, strict caps, and independent audits \u2014 the crisis of opaque political funding will continue. The instrument may change. The problem will not.<\/span><\/p>\n

      \n

      SUMMARY TABLE: ELECTORAL TRUSTS \u2013 DESIGN VS. REALITY<\/span><\/strong><\/p>\n

      \n
      \n
      <\/div>\n
      <\/div>\n<\/div>\n\n\n\n\n\n\n\n\n\n\n\n\n
      Aspect<\/span><\/th>\nLegal Framework<\/span><\/th>\nCurrent Reality (2024-26)<\/span><\/th>\n<\/tr>\n<\/thead>\n
      Purpose<\/span><\/strong><\/td>\nClean, transparent corporate political funding<\/span><\/td>\nHas become the primary vehicle for opaque corporate donations<\/span><\/td>\n<\/tr>\n
      Registration<\/span><\/strong><\/td>\nSection 8 of Companies Act; CBDT approval<\/span><\/td>\n8 major trusts registered; no applications rejected<\/span><\/td>\n<\/tr>\n
      Tax exemption<\/span><\/strong><\/td>\n100% under Section 80GGB and 13B<\/span><\/td>\nFully utilized<\/span><\/td>\n<\/tr>\n
      Disclosure to public<\/span><\/strong><\/td>\nAnnual returns filed with CBDT<\/span><\/td>\nDelayed by months; aggregated; not user-friendly<\/span><\/td>\n<\/tr>\n
      Donor\u2018s disclosure<\/span><\/strong><\/td>\nNot required under Section 182<\/span><\/td>\nShareholders cannot trace beneficiary party<\/span><\/td>\n<\/tr>\n
      Share of BJP<\/span><\/strong><\/td>\nNo cap<\/span><\/td>\n81.7% of all electoral trust donations (2024-25)<\/span><\/td>\n<\/tr>\n
      Supreme Court scrutiny<\/span><\/strong><\/td>\nNone (not addressed in electoral bonds verdict)<\/span><\/td>\nLoophole remains open<\/span><\/td>\n<\/tr>\n
      Reform proposals<\/span><\/strong><\/td>\nMultiple (ADR, Moneylife, academics)<\/span><\/td>\nNone enacted<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n
      \n

      Next Topic (Topic 21):<\/span><\/strong>\u00a0\u201cCorporate Donations and Quid Pro Quo \u2013 The Enforcement Agency Nexus\u201d<\/span><\/p>\n

      To be continued tomorrow with in-depth analysis of how corporations that face enforcement agency actions become major donors, and whether donations influence regulatory outcomes.<\/span><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

      TOPIC 20 How Corporate Money Continues to Flow Unchecked After the Ban on Electoral Bonds The Supreme Court struck down electoral bonds in February 2024, declaring anonymous political funding a violation of citizens’ right to know. Within months, a new mechanism surged to prominence. Electoral trusts \u2014 opaque intermediaries that collect corporate donations and channel […]<\/p>\n","protected":false},"author":1,"featured_media":4092,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"googlesitekit_rrm_CAowk73GDA:productID":"","footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[50,46],"tags":[1178,1172,1173,1193,1190,1189,1118,1192,1188,1091,1191,764,1144,1177,1062,763,782,1182,1179,1171,1194,1196,1195,354,1181],"class_list":["post-4091","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-historical-facts","category-truth-facts","tag-adr-reports","tag-anonymous-donations","tag-bjp-funding","tag-campaign-finance","tag-companies-act-india","tag-congress-funding","tag-constitutional-debate","tag-corporate-donations","tag-corporate-political-funding","tag-democratic-accountability","tag-election-funding","tag-electoral-bonds","tag-electoral-reforms","tag-electoral-trusts","tag-governance-in-india","tag-indian-democracy","tag-indian-elections","tag-political-corruption","tag-political-finance","tag-political-funding-in-india","tag-political-transparency","tag-right-to-know","tag-secret-political-funding","tag-supreme-court-of-india","tag-transparency-in-politics"],"aioseo_notices":[],"jetpack_publicize_connections":[],"_links":{"self":[{"href":"https:\/\/untoldpages.in\/index.php?rest_route=\/wp\/v2\/posts\/4091","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/untoldpages.in\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/untoldpages.in\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/untoldpages.in\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/untoldpages.in\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=4091"}],"version-history":[{"count":1,"href":"https:\/\/untoldpages.in\/index.php?rest_route=\/wp\/v2\/posts\/4091\/revisions"}],"predecessor-version":[{"id":4093,"href":"https:\/\/untoldpages.in\/index.php?rest_route=\/wp\/v2\/posts\/4091\/revisions\/4093"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/untoldpages.in\/index.php?rest_route=\/wp\/v2\/media\/4092"}],"wp:attachment":[{"href":"https:\/\/untoldpages.in\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=4091"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/untoldpages.in\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=4091"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/untoldpages.in\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=4091"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}