Electoral Bonds: A Comprehensive Guide

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What is an Electoral Bond?

An electoral bond is akin to a financial tool designed for making donations to political parties. Notably, even the general public can issue these bonds to fund eligible political parties. To be eligible for running campaigns, a political party must register under Section 29A of the Representation of the People Act, 1951. Think of electoral bonds as akin to banknotes-payable to the bearer, free of interest, and on demand. Individuals or corporations can purchase these bonds digitally or through a demand draft (DD) or cheque. The scheme was introduced on January 29, 2018, during the tenure of the Narendra Modi-led NDA government.

How Does The Electoral Bond Scheme Work?

• Issuers : Any Indian corporate body, registered agency, or undivided Hindu family can issue electoral bonds by donating funds to political parties of their choice.
• Denominations : Authorized banks (such as the State Bank of India) issue electoral bonds in denominations of ₹1000, ₹10,000, ₹1,00,000, ₹10,00,000, and ₹1,00,00,000.
• Validity : Regardless of the denomination, electoral bonds are valid for 15 days after issuance.
• Recipient Parties : Political parties receive electoral bonds issued by the public or corporations.
• Reporting : Political parties must report the total electoral bonds received to the electoral commission.
• Tax Benefits : Issuing electoral bonds comes with tax advantages. Donors enjoy tax exemptions under Section 80GG and Section 80GGB of the Income Tax Act. Meanwhile, the receiving political party can also claim a donation deduction under Section 13A.

Advantages of Electoral Bonds:

1. Transparency : All electoral bonds issued are redeemed through bank accounts disclosed by the Election Commission of India, thus strengthening accountability.
2. Curbing Malpractice : Widespread use of electoral bonds can discourage political parties from merely collecting funds without transparency.

Disadvantages of Electoral Bonds:

1. Criticism : Critics argue that electoral bonds still lack complete transparency and can be misused.
2. Anonymity : The anonymity of donors remains a point of contention.

Electoral Bonds Globally:

Electoral bonds are not unique to India. Several countries use similar financial instruments for political funding. These bonds are typically purchased by eligible donors-individuals, corporations, or organizations-from authorized banks.

In summary, electoral bonds straddle the intersection of finance, politics, and transparency. Whether they’re a boon or a bane depends on your perspective, but they certainly add intrigue to the electoral landscape! 🗳️🌐

Electoral Bonds in India: The Present Scenario

Electoral bonds continue to be a topic of debate and scrutiny in India. These interest-free bearer bonds serve as financial instruments for political donations. Here’s where things stand:

1. Purchasing Electoral Bonds :Individuals and companies can still purchase electoral bonds from authorized branches of the State Bank of India (SBI) .Available denominations include ₹1,000, ₹10,000, ₹1 lakh, ₹10 lakh, and ₹1 crore.These bonds can be obtained through a KYC-compliant account and are used for making donations to political parties.
2. Anonymity and Encashment :Electoral bonds remain anonymous-donor information is not entered on the instrument.Political parties must encash the bonds within a stipulated time.The amount received as a donation is deposited into the Prime Minister’s Relief Fund .
3. Availability and Timing :Electoral bonds are not available for purchase at all times.They are offered during specific periods: 10 days in a gap of four months (January, April, July, and October). 30 days in Lok Sabha election years.
4. Challenges in the Supreme Court :A constitutional bench in the Supreme Court has been hearing arguments against the constitutionality and legality of the Electoral Bond Scheme.Petitioners’ lawyers have raised concerns about the threat posed to Indian democracy.Notable advocates, including Prashant Bhushan , Nizam Pasha , Kapil Sibal , and others, have presented their viewpoints.

Donations and Transparency:

In summary, electoral bonds continue to be a complex and contentious aspect of political funding in India. While they offer anonymity, questions persist about transparency and their impact on democratic processes. As the legal battle unfolds, electoral bonds remain a critical point of discussion. 🗳️💬

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