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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