An electoral bond: What is it?
Similar to a promissory note, an electoral bond is available for purchase from specific State Bank of India branches by any Indian national or company that has been incorporated in the country. The individual or business can then donate the same amount to any political party that meets the eligibility requirements. The bonds resemble interest-free bank notes that are payable to the bearer upon demand. These bonds can be bought online or with a check by an individual or group.
Electoral bonds were first introduced when?
The Finance Bill of 2017 included the introduction of the electoral bonds. The Electoral Bond Scheme 2018 was announced by the Narendra Modi-led NDA government on January 29, 2018.
How are electoral bonds used?
Election bonds are very easy to use. The bonds, which have a range of Rs 1,000 to Rs 1 crore, will be issued in multiples of Rs 1,000, Rs 10,000, Rs 100,000, and Rs 1 crore. These will be offered at a few SBI branches. The bonds can be bought by a donor who has a KYC-compliant account, and they can then be donated to the recipient or party of their choice. The bonds can now be encashed by the recipient using the party’s verified account. The fifteen-day validity period is allotted to the electoral bond.
The cities of New Delhi, Gandhinagar, Chandigarh, Bengaluru, Bhopal, Mumbai, Jaipur, Lucknow, Chennai, Kolkata, and Guwahati are home to the 29 designated SBI branches.
What time will the bonds be on sale?
Every quarter, at the start of the quarter, there is a 10-day window for buying the electoral bonds. The government has set aside the first ten days of January, April, July, and October for the purchase of electoral bonds. In the year of the Lok Sabha elections, the government will specify an extra thirty days.
Election bonds: Requirements
1. Electoral bonds may be awarded to any party registered under section 29A of the Representation of the Peoples Act, 1951 (43 of 1951), provided that the party has received at least one percent of the votes cast in the most recent Assembly or General elections. The Election Commission of India (ECI) will assign the party a verified account, and only this account will be used to transact electoral bonds.
2. The donor’s name will not appear on the electoral bonds. As a result, the identity of the donor may not be known to the political party.
Are bonds issued for elections subject to taxes?
Donations would be tax deductible, according to remarks made by Arun Jaitley, the finance minister at the time, in February 2017. Therefore, as long as the political party files its own returns, the donor will receive a deduction and the recipient, or the party, will receive a tax exemption.
Why did India introduce electoral bonds?
Electoral bonds were introduced, according to the Narendra Modi-led government, to guarantee that all donations made to a party would be recorded in the balance sheets without disclosing the donor’s information to the public.
Electoral bonds, according to the government, would monitor the flow of illicit funds into elections. The government claimed that without electoral bonds, contributors would be forced to take money out of their businesses and give it in cash.
Why is the electoral bond controversy so great?
Experts believe that the government shouldn’t hold back from allowing the public to see the specifics of these donations if the electoral bonds program was implemented to promote greater transparency.
According to experts and a number of politicians, the shareholders of a corporation will be oblivious to the company’s contribution because neither the bond buyer nor the political party receiving the donation is obligated to reveal the donor’s identity. It will be unknown to voters how and by whom a political party has received funding.
The electoral bond plan’s detractors contend that because the donor’s identity is unknown, there may be an influx of illicit funds. Others claim that the plan was created to enable large corporate entities to make financial donations without disclosing their identities. Civil rights societies claim that the idea of donor “anonymity” jeopardizes democracy itself.
Donations made through electoral bonds, according to the Congress party, are the same as money laundering.
Restrictions eliminated following the implementation of the electoral bond program
1. Before, the Companies Act prohibited foreign corporations from making donations to any political party.
2. Section 182 of the Companies Act allowed a company to donate up to 7.5% of its average three-year net profit as political contributions.
3. Companies were required by the same Act section to include information about their political donations in their annual statement of accounts.
The Finance Bill was amended by the government to remove this provision’s application to businesses in the event of electoral bonds.
As a result, political parties can now receive donations from domestic and international businesses without requiring disclosure of the contributions.
What is the ruling on electoral bonds from the Supreme Court?
The Supreme Court ordered all political parties to provide the ECI with information regarding donations made through electoral bonds on April 12, 2019. Additionally, it requested that the Finance Ministry shorten the 10-day window for buying electoral bonds to just five days. A date for the supreme court to hear additional arguments opposing the electoral bonds has not yet been set.
The Indian Election Commission’s position on electoral bonds
On April 10, 2019, the Election Commission informed the Indian Supreme Court that, although it did not oppose the Electoral Bonds Scheme, it did not sanction the payment of money to political parties in an anonymous manner.
“While we support electoral bonds, we also favor complete transparency and disclosure. Senior Advocate Rakesh Dwivedi addressed the supreme court on behalf of the poll panel, stating, “We are against anonymity.” The submissions from the poll panel were made during an appeals court hearing concerning several pleas contesting the legality of electoral bonds.
Reserve Bank of India regarding the election bond program
The RBI expressed disapproval of the plan, per a November 18, 2019, HuffPost India article. The bonds would “undermine the faith in Indian banknotes and encourage money laundering,” the central bank had warned the government.
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