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DAILY NEWS ANALYSIS

  • 20 March, 2021

  • 4 Min Read

SC Hearing Issue of Electoral Bonds

SC Hearing Issue of Electoral Bonds

The Supreme Court agrees to hear a plea to stay the fresh sale of Electoral Bonds. The hearing of the case is set before the upcoming state assembly elections.

What are Electoral Bonds?

  • Electoral Bonds are interest-free bearer financial instruments for making donations to political parties.
  • They were introduced by the Government of India by the Finance Bill, 2017.
  • The bonds are issued in multiples of Rs. 1,000, Rs. 10,000, Rs. 1 lakh, Rs. 10 lakh and Rs. 1 crore without any maximum limit.

Key Features of Electoral Bonds:

  • Only the registered Political Parties which have secured atleast 1% of the votes polled in the last Lok Sabha elections or the State Legislative Assembly are eligible to receive the Electoral Bonds.
  • Electoral bonds may be purchased by a citizen of India or entities incorporated or established in India.
  • The State Bank of India has been authorised to issue and encash Electoral Bonds.
  • The Electoral Bonds shall be valid for 15 calendar days from the date of issue.
    • No payment shall be made to the Political Party if the Electoral Bond is deposited after the expiry of the validity period.
  • Political parties will create a specific account to encash money from electoral bonds.
  • This account will be verified by the Election Commission.

Arguments against Electoral Bonds:

  • Neither the donor nor the political party is obligated to reveal where the donation comes from.
  • The sale of electoral bonds had become an avenue for shell corporations and entities to park illicit money and even proceeds of bribes with political parties.
  • Electoral Bonds donations enjoy 100% tax exemption.
  • Further, they need not be reported to the Income Tax department either.
  • The government has removed the eligibility cap for funding political parties.
    • Earlier a company can make a political contribution only if it has 7.5% of the net average profit for 3 preceding financial years.

Source:


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22 Mar,2026

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