Electoral bonds: In an important decision of 15 February 2024, the Supreme Court has banned the receipt of electoral bonds as donations to political parties. However, it was implemented in the name of bringing transparency in donations received by political parties in India. The most important thing is that it is very important to know what this electric bond is and how political parties get donations through it. Come, let us know about electoral bonds…
What is electoral bond?
To ban cash in political donations and bring transparency in it, the Modi government at the Center had introduced electoral bonds in the year 2018. The government’s objective behind this was that clean money would come to political parties in a transparent manner. Individuals, corporates and institutions buy bonds, which are called electoral bonds, to donate to political parties. Political parties earn money by encashing these electoral bonds in banks.
Why was electoral bond started?
To improve the system of electoral donations in the country, the Modi government had issued the notification of Electoral Bond Scheme on 2 January 2018. Electoral bonds were brought by the Finance Act 2017. These bonds are issued four times a year in January, April, July and October. For this, people, companies and institutions who donate to political parties buy electoral bonds by visiting the bank’s branch or online on its website. This electoral bond is deposited in the funds of political parties. However, the central government had claimed that electoral bonds would bring transparency in election donations. The then Finance Minister Arun Jaitley had written in January 2018, ‘The scheme of electoral bonds has been brought to bring ‘clean’ money and increase ‘transparency’ in the system of political funding.
Where to get electoral bond
Electoral bonds, which are presented as election donations to political parties, are issued by SBI 29 branches. These branches include branches of New Delhi, Mumbai, Kolkata, Chennai, Gandhinagar, Chandigarh, Patna, Ranchi, Guwahati, Bhopal, Jaipur and Bengaluru. According to a report, by the year 2019, 12 phases of sale of electoral bonds had been completed. During this period, the maximum share of 30.67 per cent of electoral bonds was sold in Mumbai and the maximum share of 80.50 per cent was encashed in Delhi.
Those who buy electoral bonds get tax exemption
Any donor who donates to political parties in elections can purchase electoral bonds worth up to Rs 1 crore from any branch of SBI, hiding his identity, and donate it to the political party of his choice. This system hides the identity of the donors and also provides tax exemption. Only the political party that gets at least 1 percent votes in the general elections can receive donations from this bond.
Election donations can range from Rs 10 lakh to Rs 1 crore.
An individual, group of people or a corporate can purchase electoral bonds from designated branches of SBI within 10 days of the month in which the bond is issued. The bonds are issued in multiples of Rs 1000, Rs 10000, Rs 1 lakh, Rs 10 lakh and Rs 1 crore with a validity of 15 days from the date of issue. These bonds cannot be purchased in cash and the buyer has to submit a KYC (Know Your Customer) form to the bank. Political parties can encash the bonds through their accounts with SBI. That is, the party to whom the customer gives this bond as donation can redeem it by depositing it in his designated account of SBI. Cash payment is not made to the party under any circumstances and the money goes to its designated account only.
possible to receive donations from abroad
Justifying the launch of electoral bonds, the then Finance Minister Arun Jaitley had written in January 2018, ‘The scheme of electoral bonds has been brought to bring ‘clean’ money and increase ‘transparency’ in the system of political funding. ‘ Electoral bonds were brought by changes in the Finance Act 2017. In fact, these have further increased the risks to transparency.