Electoral Bonds Surpass ₹16,518 Crore in 30 Transactions: A Closer Look

Orhan Wadia
Orhan Wadia - Editor
4 Min Read

Background: Electoral Bonds and Political Funding

The Electoral Bonds Scheme, implemented in 2018, has witnessed a substantial collection of over ₹16,518 crore across 30 tranches, according to government data. The primary objective of the scheme is to ensure transparent and clean tax-paid funds enter the political funding system through legitimate banking channels.

Eligibility Criteria for Bond Recipients

Only political parties registered under Section 29A of the Representation of the People Act, 1951, securing a minimum of 1% of the votes in the last General Election to the House of the People or the Legislative Assembly of the State, are eligible to receive electoral bonds. These bonds are made available for purchase in January, April, July, and October.

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Commission-Free and Tax Implications

The Electoral Bond Scheme, as outlined in the Gazette Notification dated 02.01.2018, specifies that no commission, brokerage, or additional charges are payable by the buyer for the issuance of a bond. Furthermore, no Goods and Services Tax (GST) or other taxes/cess are imposed on the purchaser during the acquisition of electoral bonds.

Government Data Highlights

Data presented during the recent Budget session in Lok Sabha revealed that the total value of Electoral Bonds purchased from the State Bank of India, spanning from Phase-I to Phase-XXX, amounts to approximately ₹16,518 crores. The commission paid to the State Bank of India by the Government of India for the issuance and redemption of Electoral Bonds ranges around ₹8.57 crores. Additionally, the amount disbursed by the Government of India to Security Printing & Minting Corporation of India Ltd (SPMCIL) to date is approximately ₹1.90 crores.

Implementation of Electoral Bond Scheme

The Centre officially notified the Electoral Bond Scheme in 2018, allowing individuals who are citizens of India or incorporated in India to purchase these bonds. These bonds, available in various denominations, can be bought singly or jointly with others. The scheme ensures that only eligible Political Parties, meeting specified criteria, can encash the bonds through authorized banks.

Key Features of Electoral Bonds

Such bonds, akin to Promissory Notes, are interest-free bearer instruments available in denominations of ₹1,000, ₹10,000, ₹1,00,000, ₹10,00,000, and ₹1,00,00,000. Buyers must adhere to Know Your Customer (KYC) norms and make payments from a bank account to purchase these bonds, which do not carry the name of the payee.

Purchase Period and Validity

Electoral bonds are available for purchase during specified ten-day periods in January, April, July, and October, as determined by the Central Government. The State Bank of India is currently authorized to sell these bonds through its branches. The bonds, valid for 15 calendar days from the date of issue, must be deposited within this period. However, during general elections, an additional 15 days are provided for depositing the bonds in an eligible Political Party’s account, with credits taking place on the same day.

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