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Electoral Bonds Scheme - All you need to Know

Electoral Bonds Scheme - All you need to Know

Electoral Bonds Scheme - All you need to Know


  • The Electoral Bond is one of the financial instruments to make donations to the political parties. To bring transparency in the donation procedure to various political parties during elections, the Union Government has launched a new scheme. The scheme is named as Electoral Bond Scheme. Under this scheme, the political funding system in India must be cleaned and chances of corruption must also reduce. The scheme curtails the cash funding by a single donor and introduces the electoral bonds.

Objectives of Electoral Bond Scheme-
  • This scheme must cleanse the political funding system of India.
  • It would limit the maximum amount of cash donation to reduce corruption in the election procedure.
  • It would reduce the use of Black Money in the election of India.
What is Electoral Bond ? 
  • The Electoral Bond is issued by the Scheduled Banks if a person wants to donate money to the political parties.
  • It is issues to the donors against digital payment or cheque.
  • The bonds are not available against cash payment.
  • The electoral bonds must be redeemable in respective accounts of the registered political parties from the issued bonds within the stipulated time limit.
  • The Electoral Bonds would be the bearer bonds and the receivers cannot be able to know about the donor.
Features of the Electoral Bond Scheme-
  • The Electoral Bonds were announced in Union Budget 2017-2018 for bringing transparency in political funding system.
  • This bond would not allow the donor to donate more than Rs. 2000 which was one-tenth of the earlier limit Rs. 20000.
  • The introduction of Electoral Bonds would take effect on 1st April, 2018. After that, the people can donate money to the political parties through the Electoral Bonds or other digital modes.
  • The Scheme would be administered under “Income Tax Act”.
  • The Electoral Bonds are sold by proposing the amendments in the 13A section of Income Tax Act 1961 and Reserve Bank of India Act, 1934.
  • The amendment in the IT Act would provide the exemption to the political party if donation received does not exceed Rs. 2000. The fund must be provided through draft, cheque, any other electronic clearing system or the electoral bonds.
  • The donors must purchase the bond using digital mode or through cheque. This would help to track the record of the sources of purchase.
  • The Electoral Bonds Scheme addresses the donor’s concern to remain unidentified to general public or opposition political parties.
  • The Political parties must have to file the return within the prescribed time as per the Income Tax Act. They have to fulfill every condition to get the exemption from Income Tax.
  • The amendment in RBI act makes the Electoral Bond as the instrument for giving donation to the political parties. The RBI must act as the intermediary in the entire process.
  • The Government has already drafted the norms of the Electoral Bond.  The norms would be circulated to RBI, political parties and the Election Commission.
  • RBI would also notify the banks who would issue the Electoral Bonds.
According to the Government, the Electoral Bond Scheme must ensure the accountability and transparency in the political funding process.
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