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What is electoral bond?

by Uddipana Gogoi

Electoral bond was introduced with the Finance Bill (2017). Subsequently, on January 29, 2018 the Narendra Modi-led NDA government notified the Electoral Bond Scheme 2018. Electoral bonds are financial instruments. The electoral bond scheme introduces electoral bonds for making donations to political parties.

Additionally, The objective of introduction of such bill is to prevent traditional under the table donations to the political parties during election time. Also, it allows the Indian citizens and corporations to provide donations legally to the political parties. Official spending by the Election Commission of India and the Government of India was around Rs. 7,000-8,000 crores. State Bank of India authorized to issue such bonds. Thus, the 29 specified SBI branches are in cities such as

New Delhi









Kolkata and

Guwahati are eligible for issue of such electoral bonds.  It issues in multiples of Rs.1000, Rs. 10000, Rs. 1 lakh, Rs. 10 lakh, Rs. 10 crore without any maximum limit. An Indian citizen or any incorporation incorporated in India is eligible to make investment in electoral bonds.

Characteristics of  electoral bond

  1. The electoral bonds are available for purchase for 10 days at the beginning of every quarter January, April, July and October. Additionally, period of 30 days shall be specified by the government in the year of Lok Sabha elections.
  2. The section 29A of the Representation of the Peoples Act, 1951 (43 of 1951) provides for registration of a party 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. 
  1. The political party is not aware of the donor’s identity because it does not bear the name of donor/investor.
  2. Moreover, a donor will get a deduction and the recipient, or the political party, will get tax exemption, with condition that returns are the political party will file it.
  3. Additionally, it ensures that all the donations to a party would be accounted for in the balance sheets without exposing the donor details to the public.
  4.  Moreover, it keeps a tab on the use of black money for funding elections. Moreover, in the absence of electoral bonds, donors would have no option but to donate by cash after siphoning off money from their businesses.
  5. Additionally, no foreign company could donate to any political party under the Companies Act
  6. A firm could donate a maximum of 7.5 per cent of its average three year net profit as political donations according to Section 182 of the Companies Act.

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