Everything On Electoral Bonds

Both managing a political party and running a political campaign is costly. A lot of money is required to bring together party workers and promote them. Parties often kept their sources of funding secret. The government decided to offer an electoral bond program to the public to combat corruption and black money. The 2017-2018 budget announced the introduction of this new scheme.

What is Electoral Bonds ?

These instruments, also known as "electoral bonds", are bearer banking instruments. The general public can issue these bonds to finance eligible political parties. A political party that qualifies as eligible to run for elections must be registered under Section 29A of the 1951 Representation Act. To be considered a registered party, the party must have received at least 1% of the votes in the previous general election to the legislative body.

What is the electoral bond scheme?

Any Indian citizen, corporate body, registered association/association or Hindu Undivided Family may issue electoral bonds. These can be used for donations to eligible political parties. The following denominations of electoral bonds can be issued by RBI-notified banks like SBI (State Bank of India), and others: Rs1000, R10,000, Rs1,00,000., Rs10,00,000., and Rs10,00,000. No matter what denomination, electoral bonds remain valid for 15 days from the date they were issued.

Political parties receive the electoral bonds issued by corporations or the public. The electoral commission is then expected to contact the political parties to return the total amount of electoral bonds received. There are limitations on the time bonds can be issued as an issuer of electoral bond. One is permitted to issue bonds for a maximum of ten consecutive days during the months January, April and July, then again in the second half of the calendar year, July and October. In an election year, there will be a 30-day window to issue electoral bonds.

The issuing of electoral bonds has tax benefits. For the same, the electoral bond donor receives a tax benefit. The income tax act exempts one's electoral bonds donations from tax under Section 80GGC/80GGB. The Income Tax Act's Section 13A allows the recipient political party to receive a donation.

Advantages Electoral Bond Scheme

These bonds Although the identity of the donor will not be revealed during the transaction, it is not transparent and there may still be malpractice. One potential moral outcome of keeping foreign donors anonymous and protecting their privacy is to not check for foreign funding. Unregulated foreign funding could be used to harm the country's interests. Protect the anonymity and identity of the issuing party or issuer. The bond copy is not formally issued with the donor's name on it. The donor's identity is therefore protected. Donations can also be made digitally or by cheques.

It helps the government achieve its goal of making election funding more secure, digitalized and digitized. Legally, any donation exceeding Rs 2000 must now be made in the form cheques or electoral bonds.

All bonds must be redeemed using bank accounts that have been disclosed to the Election Commission of India. This ensures transparency and prevents any malpractice.

- Increasing the use of electoral bonds can help curb fake political parties that are merely looking to collect money from the public. Because only parties that have received at least 1% vote in the general election are eligible for electoral funding, this is possible.

Criticisms Electoral Bond Scheme

- Some critics claim that electoral bonds were created to cut off funding for opposition parties.

Electoral bonds are not a threat to the formation of shell corporations. This could be done to fund one political party or another. The limit of 7.5% of annualized profits being donated to a political party is also a way to encourage this.


Transitioning to electoral bonds aims to increase transparency about the sources of political financing. This innovative scheme protects the rights of donors while digitizing donations via electronically issued bonds. We don't know how well this scheme worked in the country.

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