Electoral Bonds
Context:
- An electoral bond is like a promissory note that can be bought by any Indian citizen or company incorporated in India from select branches of State Bank of India.
- The citizen or corporate can then donate the same to any eligible political party of his/her choice.
- The bonds are similar to bank notes that are payable to the bearer on demand and are free of interest.
- An individual or party will be allowed to purchase these bonds digitally or through cheque.
- The bonds will be issued in multiples of Rs 1,000, Rs 10,000, Rs 100,000 and Rs 1 crore (the range of a bond is between Rs 1,000 to Rs 1 crore).
- These will be available at some branches of SBI. A donor with a KYC-compliant account can purchase the bonds and can then donate them to the party or individual of their choice.
- The electoral bond will be valid only for fifteen days.
When are the bonds available for purchase?
- The electoral bonds are available for purchase for 10 days in the beginning of every quarter.
- The first 10 days of January, April, July and October has been specified by the government for purchase of electoral bonds.
- An additional period of 30 days shall be specified by the government in the year of Lok Sabha elections.
Are electoral bonds taxable?
- In February 2017, the then finance minister Arun Jaitley said that the donations would be tax deductible.
- Hence, a donor will get a deduction and the recipient, or the political party, will get tax exemption, provided returns are filed by the political party.
Electoral bonds: Conditions
- Any party that is registered under section 29A of the Representation of the Peoples Act, 1951 (43 of 1951) and has secured at least one per cent of the votes polled in the most recent General elections or Assembly elections is eligible to receive electoral bonds.
The party will be allotted a verified account by the Election Commission of India (ECI) and the electoral bond transactions can be made only through this account.
- The electoral bonds will not bear the name of the donor. Thus, the political party might not be aware of the donor’s identity.
Syllabus: Prelims
