- 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 banknotes 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.
How to use Electoral Bonds?
- 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). A donor with a KYC-compliant account can purchase the bonds and can then donate them to the party or individual of their choice. The receiver can encash the bonds through the party’s verified account. The electoral bond will be valid only for fifteen days.
Electoral bonds: Conditions
- 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.
- 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?
- 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?
- 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.
- Electoral bonds would keep a tab on the use of black money for funding elections
- Any citizen or institution or any company in India can purchase electoral bonds to fund registered political parties.
- These electoral bonds will be available in the denomination of Rs. 1,000, Rs. 10,000, Rs. 1 lac, Rs. 10 lacs and Rs. 1 crore.
- Every party which is registered under section 29A of the Representation of the Peoples Act, 1951 and has secured at least 1% votes polled in the most recent Lok Sabha or State election will be eligible to receive funds through electoral bonds.
- Every donor has to provide his KYC detail to the banks.
- The name of the electoral bond purchaser will be kept confidential by the banks.
- Electoral bonds will be valid for 15 days from the date of purchase.
- No interest will be given by the banks on these bonds.
- These bonds can be bought from selected branches of State Bank of India only.
- The banks will have full information about the purchasers of the Electoral Bonds.
- The bonds will be available for purchase for a period of 10 days each at the beginning of every quarter. In the year of Lok Sabha elections; 30 days extra will be provided.
- Bonds can be purchased in January, April, July and October months of each year.
- Political parties will also have to inform the Election commission that how much money they got from Electoral bonds.