Budget 2024 failed to give any thrust to electoral bonds in an election year, even though these bearer banking instruments launched in 2018 have been mopping up 55.09 percent of the overall donations made to political parties.
In the year 2021-22, Rs 2,664.2725 crore were diverted to political funding through electoral bonds.
To clean up the system and streamline political donations, the government has encouraged the use of electoral bonds, even though one can donate directly to political parties through demand drafts, online transfer or cheques.
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The donation amount needs to be deposited in the State Bank of India (SBI) after KYC (know your customer) procedure. Later, this bond (that bears no name of the donor or the name of the political party) is then handed over to the party it is intended for. However, the money needs to be claimed by the political party within 15 days. If it doesn’t claim the money that the donor wished to donate to, then the money gets transferred to the PM Relief Fund.
Donations made through electoral bonds are eligible for tax deduction of 100 percent, but the political party’s name is to be kept hidden when filing tax returns. It is necessary to produce the documents and permanent account number to claim the deduction under Section 80GGB/ 80 GGC of the Income Tax Act, 1961.
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Though these bonds are available on select days in a month, in the Lok Sabha election year, the purchase period can be extended to 30 days.
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