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Electoral Bond

About Electoral Bond

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What is an Electoral Bond

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.
 
When was electoral bond introduced?
 
The electoral bonds were introduced with the Finance Bill (2017). On January 29, 2018 the Narendra Modi-led NDA government notified the Electoral Bond Scheme 2018.
 
How to use electoral bonds?
 
Using electoral bonds is quite simple. 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. Now, the receiver can encash the bonds through the party's verified account. The electoral bond will be valid only for fifteen days.
 
The 29 specified SBI branches are in cities such as New Delhi, Gandhinagar, Chandigarh, Bengaluru, Bhopal, Mumbai, Jaipur, Lucknow, Chennai, Kolkata and Guwahati.
 
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.
 
Electoral bonds: Conditions
 
1. 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.
 
2. The electoral bonds will not bear the name of the donor. Thus, the political party might not be aware of the donor's identity.
 
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.
 
Why were electoral bonds introduced in India?
 
According to the Narendra Modi-led government, electoral bonds were being introduced to ensure that all the donations made to a party would be accounted for in the balance sheets without exposing the donor details to the public.
 
The government said that electoral bonds would keep a tab on the use of black money for funding elections. In the absence of electoral bonds, donors would have no option but to donate by cash after siphoning off money from their businesses, the government said.
 
Why is there a controversy over electoral bond?
 
Experts are of the view that if the electoral bonds scheme had been introduced to bring about greater transparency, the government must not restrain from allowing details of such donations to be made public.
 
Experts and several politicians say that since neither the purchaser of the bond nor the political party receiving the donation is required to disclose the donor’s identity, the shareholders of a corporation will remain unaware of the company’s contribution. Voters, too, will have no idea of how, and through whom, a political party has been funded.
 
Opponents of the electoral bond scheme argue that since the identity of the donor has been kept anonymous, it could lead to an influx of black money. Some others allege that the scheme was designed to help big corporate houses donate money without their identity being revealed. According to civil rights societies, the concept of donor "anonymity" threatens the very spirit of democracy.
 
The Congress party said that the donations made through electoral bonds were equivalent to money laundering.

Restrictions that were done away with after the introduction of the electoral bond scheme
 
1. Earlier, no foreign company could donate to any political party under the Companies Act
 
2. A firm could donate a maximum of 7.5 per cent of its average three year net profit as political donations according to Section 182 of the Companies Act
 
3. As per the same section of the Act, companies had to disclose details of their political donations in their annual statement of accounts.
 
The government moved an amendment in the Finance Bill to ensure that this proviso would not be applicable to companies in case of electoral bonds.
 
Thus, Indian, foreign and even shell companies can now donate to political parties without having to inform anyone of the contribution.
 
What does the Supreme Court have to say on electoral bonds?
 
On April 12, 2019 the Supreme Court asked all the political parties to submit details of donations received through electoral bonds to the ECI. It also asked the Finance Ministry to reduce window of purchasing electoral bonds from 10 days to five days. The apex court is yet to fix a date for hearing other pleas against the electoral bonds.
 
Election Commission of India's view on electoral bonds
 
The Election Commission on April 10, 2019 told the Supreme Court of India that while it was not against the Electoral Bonds Scheme, it did not approve of anonymous donations made to political parties.
 
“We are not opposed to electoral bonds...but want full disclosure and transparency. We are opposed to anonymity,” Senior Advocate Rakesh Dwivedi, appearing for the poll panel told the apex court. The poll panel’s submissions came during a hearing on bunch of pleas challenging the validity of electoral bonds in the apex court.
 
Reserve Bank of India on electoral bonds scheme
 
According to an article published by HuffPost India on November 18, 2019, the RBI was critical of the scheme. The central bank had warned the government that the bonds would "undermine the faith in Indian banknotes and encourage money laundering."
 

Latest Updates on Electoral Bond

Upon receiving clearance from the Centre, Justice Sanjiv Khanna will assume the role of the 51st Chief Justice of India, serving for six months before retiring on May 13, 2025

Updated On: 17 Oct 2024 | 1:24 PM IST

The top court said it cannot order a roving inquiry into purchase of electoral bonds on the assumption of a quid pro quo for award of contract

Updated On: 02 Aug 2024 | 11:41 PM IST

The SC is also scheduled to hear a batch of petitions related to the controversy-ridden medical entrance exam, NEET-UG 2024, which was held on May 5

Updated On: 21 Jul 2024 | 11:03 PM IST

A top court bench led by Chief Justice D Y Chandrachud on Friday took the note of the submissions made by senior lawyer Prashant Bhushan and listed the PILs for July 22

Updated On: 19 Jul 2024 | 2:14 PM IST

State Bank of India has declined to disclose its SOPs for electoral bond transactions, citing 'commercial confidence' and asserting them as the bank's 'intellectual property'

Updated On: 21 May 2024 | 3:31 PM IST

A five-judge Constitution bench had on February 15 scrapped the electoral bonds scheme of anonymous political funding introduced by the BJP government

Updated On: 14 May 2024 | 12:01 PM IST

Out of the Rs 16,500-crore electoral bonds, half went to the BJP and the rest to parties like the TMC and the Congress. However, those who were not ruling did not get any money, he said

Updated On: 11 May 2024 | 10:07 PM IST

The Bahujan Samaj Party chief asserted that her party 'did not take a single penny' through electoral bonds, which she said was declared illegal by the Supreme Court

Updated On: 11 May 2024 | 6:43 AM IST

A five-judge constitution bench of the apex court had on February 15 scrapped the Centre's electoral bonds scheme of anonymous political funding

Updated On: 24 Apr 2024 | 1:11 PM IST

Electoral bond issue: Finance Minister Sitharaman said electoral bonds could be reintroduced with improvements for transparency and stakeholder consultations if BJP came back to power after the ongoin

Updated On: 20 Apr 2024 | 4:37 PM IST

The senior BJP leader also defended the electoral bond scheme, saying it was introduced through a law passed in Parliament

Updated On: 17 Apr 2024 | 12:12 AM IST

During his campaign in Wayanad Lok Sabha constituency, the Congress candidate accused the BJP-led central government of using sophisticated tactics to threaten targeted businessmen

Updated On: 16 Apr 2024 | 7:42 PM IST

Modi said the next govt will share these drafts with the states, and invite their inputs, which he hopes to discuss threadbare with the CMs at a NITI Aayog meeting to be called after Lok Sabha polls

Updated On: 15 Apr 2024 | 10:27 PM IST

Prime Minister Narendra Modi defended the electoral bonds scheme during an interview with ANI, said it was aimed to curb black money during elections

Updated On: 15 Apr 2024 | 8:29 PM IST

The electoral bonds scheme, which was notified by the government on January 2, 2018, was pitched as an alternative to cash donations made to political parties

Updated On: 15 Apr 2024 | 1:38 PM IST

Eight officials of the NISP and NMDC and two officials of MECON were also named in the FIR for receiving alleged bribe of around Rs 78 lakh in clearing bills of Rs 174 crore of Megha Engineering

Updated On: 14 Apr 2024 | 11:35 PM IST

Supreme Court directed the SBI on February 15 to furnish the complete details of the bonds purchased since April 12, 2019 to the EC

Updated On: 11 Apr 2024 | 11:17 PM IST

The RBI had also flagged the possibility of firms misusing bearer bonds for money laundering, he said

Updated On: 10 Apr 2024 | 11:21 AM IST

The amount was charged across 30 phases with fees ranging from Rs 1.82 lakh to Rs 1.25 crore

Updated On: 05 Apr 2024 | 8:38 PM IST

The aggregate net losses of these 33 companies were over Rs 1 trillion. 16 out of these 33 companies paid zero or negative direct taxes in aggregate, he said

Updated On: 04 Apr 2024 | 1:29 PM IST