What is an Electoral bond?
An electoral bond is like a promissory/payable 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.
Are they similar to bank notes?
Yes, the bonds are similar to bank notes that are payable to the bearer on demand and are free of interest.
Who can purchase it?
An individual or party will be allowed to purchase these bonds digitally or through cheque.
What is the range of the bond?
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). These will be available at some branches of SBI. A donor with a KYC-compliant account can purchase the bonds and can then donate them to the party or individual of their choice. Now, the receiver can encash the bonds through the party's verified account.
What is the Validity of the bond?
The bond will be valid only for fifteen days.
The electoral bonds are available for purchase for 10 days in the beginning of every quarter(i.e.first 10 days of Jan,Apr, July and Oct).
Who are Eligible?
Any party that is registered under section 29A of the Representation of the Peoples Act, 1951 registered with the election commission as political parties , who 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.
Are they tax deductible?
Yes ,Electoral bond is tax deductible and the recipient has to file return in their balance sheet, so that it is tax exempted for the political parties (recipient).
Why the purchaser/donor of the bond is Anonmyous?
The electoral bonds will not bear the name of the donor. Thus, the political party might not be aware of the donor's identity.
“Right to know” is an integral part of the right to freedom of expression under the Article 19 of Indian Constitution. Anonymity of donor would compromise it.
Electoral bonds would keep a tab on the use of black money for funding elections. In the absence of electoral bonds, donors would have no option but to donate by cash after siphoning off money from their businesses, the government said.
If the electoral bonds scheme had been introduced to bring about transparency, then why there is anonymity of purchaser of the bond?
Neither the purchaser of the bond nor the political party receiving the donation is required to disclose the donor’s identity, the shareholders of a corporation will remain unaware of the company’s contribution.
Voters will have no idea of how, and through whom, a political party has been funded.
It is a threat to the spirit of democracy
It could lead to an influx of black money.
Donations made through electoral bonds were equivalent to money laundering being the purchaser of bond made anonymous.
Earlier, no foreign company could donate to any political party , a firm could donate a maximum of 7.5 per cent of its average three year net profit as political donations and it had to disclose details of their political donations in their annual statement of accounts.
All these restrictions are removed since the introduction of the electoral bond Scheme. Thus, Indian, foreign and even shell companies can now donate to political parties without having to inform anyone of the contribution.
Effective regulations on political financing, making bold reforms and strengthening the judicial system in order not to break the basic structure of fundamental rights and bringing the governance more feasible, accountable and transparent. Voters can also help bring in changes by demanding awareness campaigns.