What is electoral bond scheme? Know here key details

New Delhi: The fourth day of the Winter Session of Parliament on Thursday (November 21) witnessed the Congress raising the issue of electoral bonds in the Lok Sabha. As the House assembled, Congress leader Adhir Ranjan Chowdhury announced that his party has moved an Adjournment Motion over 'lack of transparency in the entire scheme of electoral bonds'. 

Chowdhury said, "the country is being looted through the scheme. It is a very big scam. The issue is serious and we have given an adjournment notice," accusing the central government over the electoral bonds issue. 

Congress MP Manish Tewari also raised the issue in Zero Hour saying, "Since February 1, 2017 when this government moved a proposal to issue unknown electoral bonds during common budget, it was an attempt to cover up corruption. When the scheme was implemented, it was limited only to the Lok Sabha elections."

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Since the issue has formed the part of discussion in Parliament, key points are given below to understand the matter:

1. The Finance Bill, 2017 introduced "electoral bonds" as interest free bearer bonds. The instrument is used to donate money to political parties. Under this scheme, the parties involved will probably be a donor, the political party and the RBI, which acts as an intermediary.

2. The Electoral bonds came intio existence after amendments through the Finance Act 2017 to the Reserve Bank of India Act 1934, Representation of Peoples Act 1951, Income Tax Act 1961 and Companies Act. The central government notified the electoral bonds scheme on January 2, 2018. It is designed to be a bearer instrument like a Promissory Note, and can be purchased by an Indian citizen or a body incorporated in India.

3. Electoral bonds may be purchased by a person, who is a citizen of India or incorporated or established in India. A person being an individual can buy electoral bonds, either alone or jointly with other individuals.

4. Only political parties registered under Section 29A of the Representation of the People Act, 1951 (43 of 1951) and which secured not less than one per cent of the votes polled in the last general election to the House of the People or the Legislative Assembly of the state are eligible to receive the electoral bonds.

5. The Electoral bonds shall be encashed by an eligible political party only through a bank account with the authorised bank. The bonds can be purchased from an authorized bank, issued to a political party and it can be encashed through the party’s verified account within 15 days. The identity of the donor will be known only to the bank and otherwise be kept anonymous.

6. The donations through Electoral bonds will be tax deductible, and the benefitting political party will get a tax exemption for the amount received. The RPA Act has also been amended to exempt parties to inform the Election Commission (EC) of any amount received above Rs 2,000, if made through electoral bonds.

7. As the central government says that bonds can be purchased only from the State Bank of India, the same could be bought by a donor with a KYC-compliant account.

8. In the beginning of each quarter- January, April, July and October, the bonds will be available for a period of 10 days. It can be purchased in multiples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh or Rs 1 crore. The name of the donor will not be mentioned in the bond.

9. Since the BJP-led government had introduced several amendments in the Companies Act, Income-Tax Act, Representation of People Act, Reserve Bank of India Act and Foreign Contribution Regulations Act through the Finance Act, 2016, and 2017 for introducing the bonds, a three-judge bench led by the then CJI, Dipak Misra, had issued notices to the Centre seeking its stand on the challenge to the law in October 2018 .

10. The matter is still pending with the apex court. The CPM first moved the court in February 2018 against the electoral bonds, citing the non-disclosure clause. Association for Democratic Reforms (ADR), a non-governmental organisation, is also one of the petitioners in the case.