What is an electoral bond?
An electoral bond is designed to be a bearer instrument like a Promissory Note — in effect, it will be similar to a bank note that is payable to the bearer on demand and free of interest.
It can be purchased by any citizen of India or a body incorporated in India.
When were the electoral bonds introduced?
The electoral bonds were introduced with the Finance Bill (2017). In January, 2018 the government notified the Electoral Bond Scheme 2018.
Who issues the electoral bond and in what denominations?
The bonds will be issued in multiples of ₹1,000, ₹10,000, ₹1 lakh, ₹10 lakh and ₹1 crore and will be available at specified branches of State Bank of India.
They can be bought by the donor with a KYC-compliant account.
Donors can donate the bonds to their party of choice which can then be cashed in via the party’s verified account within 15 days.
How the electoral bond transactions can be made?
Every 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 Lok Sabha or State election will be allotted a verified account by the Election Commission of India. Electoral bond transactions can be made only via this account.
When the bonds can be purchased?
The bonds will be available for purchase for a period of 10 days each in the beginning of every quarter, i.e. in January, April, July and October as specified by the Central Government. An additional period of 30 days shall be specified by the Central Government in the year of Lok Sabha elections.
On 7 November 2022, the Electoral Bond scheme was amended to increase the sale days from 70 to 85 in a year where any assembly election may be scheduled.
Do the electoral bonds bear the name of the donor?
The electoral bonds do not bear the name of the donor.
In essence, the donor and the party details will be available with the bank, but the political party might not be aware of who the donor is.
The intention is to ensure that all the donations made to a party will be accounted for in the balance sheets without exposing the donor details to the public.
Are the electoral bonds tax deductible?
In February 2017, the finance minister 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 is there a criticism over electoral bond?
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.
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 will have no idea of how, and through whom, a political party has been funded.
Since the identity of the donor has been kept anonymous, it could lead to an influx of black money.
The scheme may be 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.
