What is Electoral Bonds?

WHAT ARE ELECTORAL BONDS?

Simply put, electoral bonds are a means through which one can donate money to political parties. Such bonds, which are sold in multiples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, and Rs 1 crore, can be purchased from authorized branches of the State Bank of India.

When was the electoral bond introduced?

Electoral bonds were introduced with the Finance Bill (2017). On January 29, 2018, Narendra Modi led the NDA government notified Electoral Bonds Scheme 2018.

How to use electoral bonds?

 

1. Electoral bonds are fairly simple to use. The bonds will be issued in multiples of Rs 1,000, Rs 10,000, Rs 100,000, and Rs 1 crore (the bond limit is between Rs 1,000 and Rs 1 crore). These will be available in a few branches of SBI.

2. A donor with a KYC-compliant account can buy the bonds and then donate them to a party or person of their choice.

3. There are 29 designated SBI branches in cities like New Delhi, Gandhinagar, Chandigarh, Bengaluru, Bhopal, Mumbai, Jaipur, Lucknow, Chennai, Kolkata, and Guwahati.

Are Electoral Bonds Taxable?

In February 2017, the then Finance Minister Arun Jaitley stated that the donation would be tax deductible. Therefore, a payer will get the deduction, and the recipient or political party will get a tax exemption, provided the return is 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 donations made to a party would be included in the balance sheet without disclosing the details of the donor to the public.

 

The government said that electoral bonds will put a check on the use of black money to finance elections. The government said that in the absence of electoral bonds, donors will have no option but to withdraw money from their businesses and donate cash.