Banks to issue Electoral Bonds to enable donations to political parties
01 Feb 2017
Political parties can receive maximum donation up to Rs2,000 in cash from one person and any funding above that has to be through transparent modes, finance minister Arun Jaitley stated while presenting the Union Budget for 2017-18 in Parliament today.
Parties are entitled to receive donations by cheque or digital mode from their donors and have to file income tax return within the prescribed time limit.
Proposing steps towards transparent funding of political parties, the finance minister said that banks will issue Electoral Bonds to enable donations to political parties.
In a significant step to cleanse the system of funding of political parties, Jaitley said that donations to political parties can soon be made by purchasing electoral bonds from authorised banks. The finance minister said the government will soon frame a scheme in this regard and an amendment is being proposed to the Reserve Bank of India Act to enable the issuance of electoral bonds.
He said that a donor could purchase bonds from authorised banks against cheque and digital payments only. These bonds shall be redeemable in the designated account of a registered political party within the prescribed time limit from issuance of bond, he added.
The finance minister said that these steps have been proposed as the political funding for elections couldn't become transparent though attempts were made to cleanse the system. Despite amendment to the Representation of Peoples' Act, the Companies Act and the Income Tax Act to incentivise political donations by individuals, partnership firms, HUFs and companies, political parties continue to receive most of their funds through anonymous donations which are shown in cash. He said that the situation has only marginally improved since the provisions were introduced, such as granting exemption from payment of tax to both the donor and the donee, provided a list of donors is maintained, who had contributed more than Rs20,000.