FINNOVATION: ELECTORAL BONDS
Electoral bonds are a way for an Indian citizen, or a company incorporated or established in the country to anonymously fund political parties. The Electoral Bond Scheme 2018 was notified on January 2, 2018 These promissory notes can then be donated to political parties that had to en-cash them within 15 days.
BY KASHISH SINGLA | 5 min Read
Political parties which secured at least 1 per cent of the votes in the most recent parliamentary or assembly polls are eligible to encash these bonds only through a bank account with the authorised bank.
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 person with a KYC-compliant account can purchase the bonds and can donate them . After that , the receiver can encash the bonds through their verified account.
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(EB) are available for purchase for 10 days prior to beginning of every quarter. First 10 days of January, April, July and October is specified by the Indian government for purchase of electoral bonds.
Are electoral bonds taxable?
In February 2017, Arun Jaitley(finance minister) said that 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 help keeping a tab on the use of black money for funding in 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.