Electoral Bonds: Uses, Condition, Benefits and Criticism


Electoral Bonds: Uses, Condition, Benefits and Criticism

      WHY IN NEWS:

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  • Electoral bonds are financial products or securities used to fund political parties.
  • They were  included in the 2017 Finance Bill. In 2018, the Electoral Bonds were issued.

  • The issuance of electoral bonds is a way of political fundraising that presents a number of difficulties and complications.
  • The topic is important for the UPSC Mains because these concerns are frequently highlighted in the news.
  • Let’s learn about Electoral bonds, their uses, condition, benefits, and criticism in detail for a better understanding of UPSC aspirants preparing for General Studies Paper II.


  • To fight these issues (black money and corruption), the present government has proposed a range of political fundraising methods, such as the issuance of Electoral Bonds.


Any Indian corporate organisation, registered agency, or Hindu family can issue electoral bonds by donating funds to political parties of their choice that are eligible for the campaign.

  • Electoral bonds, regardless of denomination, are valid for 15 days after they are issued.
  • The electoral bonds issued by the public or corporations are distributed to political parties. Political parties plan to contact the Election Commission of India to file returns on the total amount of electoral bonds received.

  • Individuals are allowed to issue bonds for ten days in January, April, July, and October of the following year. If an election year is approaching, one has 30 days to issue electoral bonds.
  • There are several tax advantages to issuing electoral bonds. An additional tax credit is available to donors of electoral bonds.
  • Election bond donations are free from taxation under Sections 80 GG and 80 GGB of the Income Tax Act.
  • However, under Section 13A of the Income Tax Act, the political party receiving the funds may also receive a donation.

What Are The Conditions Of Electoral Bonds?

  • Any party that is registered under Section 29A of the Representation of the Peoples Act, 1951 (43 of 1951) and has received at least 1% of the votes cast in the most recent General or Assembly elections is eligible for electoral bonds.

The Election Commission of India (ECI) will grant a verified account to the party, and all the transactions of an electoral bond will be made through this account.

  • The donor’s name will not appear on the electoral bonds. As a result, the political party may be unaware of the donor’s identity.

Advantages of Electoral Bond Scheme

  • All electoral bonds issued must be redeemed through a bank account declared by the Election Commission of India, which strengthens the malfeasance.
  • The widespread usage of electoral bonds can serve to restrain political parties that exist solely to collect public funds.
  • This is due to the fact that only registered parties with at least 1% of the vote in the general election are eligible for electoral funding.
  • Electoral bonds contribute to the government’s goal of making election funding completely secure and computerised. As a result, any donation in excess of RS 2000 is not needed by law to be in the form of electoral bonds and cheques.

Criticism of Electoral Bonds

  • According to some critics, electoral bonds were implemented with the primary goal of limiting the funding available to opposition parties.

  • This is further emphasised by the elimination of the cap of donating 7.5% of the company’s annualised revenues to a political party.

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