Describe SC on Electoral Bonds.

Question

Asked: October 31, 20212021-10-31T16:00:10+05:30 2021-10-31T16:00:10+05:30In: Polity

[Deleted User] · Answer 1 · 2021-10-31T16:07:46+05:30

Context:

The Supreme Court recently refused to stay the sale of electoral bonds before Assembly elections in crucial states like West Bengal and Tamil Nadu.

A bond is a debt security which borrowers issue to raise money from investors, who are willing to lend them a sum for a certain amount of time.
Electoral bonds are bearer instruments in the nature of a Promissory Note that is payable to the bearer on demand.

The Government of India notified the Electoral Bond Scheme in January 2018.
Bond can be purchased by an Indian citizen or a company incorporated or established in India.
Only political parties registered under Section 29A of the Representation of the Peoples Act, 1951, which have secured no less than 1% votes in the last Lok Sabha elections, are eligible to receive electoral bonds.
These bonds can be bought from selected branches of the State Bank of India only.
Political parties are allotted a verified account by the Election Commission and all the electoral bond transactions are done through this account only.
The donors can buy these electoral bonds and transfer them into the accounts of the political parties as a donation.
The electoral bonds are available in denominations from Rs 1,000 to Rs 1 crore.
Electoral bonds will be valid for 15 days from the date of purchase.
No interest will be given by the banks on these bonds.
Donations will be tax-deductible, and the benefitting political party will get a tax exemption for the amount received.
They can be bought by a donor with a KYC-compliant Names of the donors are kept confidential.
Bonds can be purchased in the January, April, July, and October months of each year.

Before the budget of 2017, if a political party got a donation of less than Rs. 20,000 from a donor, then it was not mandatory to reveal the source of the fund.
This rule was misused and near about all the political parties said that they received 90% of their political fund in the denomination of less than Rs. 20000.
So a huge amount of black money was generated and used in the election campaigning.
On the basis of the recommendation of the Election Commission, in Budget 2017 the government reduced the limit of an anonymous donation to Rs. 2000 only.
The concept of Electoral bonds was introduced in the Finance Bill 2017 and was facilitated through multiple amendments in the Finance Act 2017.