Government introduces alternative funding mechanism of electoral bonds: Budget

The Union Government has announced two measures in the Budget 2017-18 to bring in greater transparency in funding of political parties.
These include capping cash funding by a single anonymous donor to Rs. 2000 (one tenth of the current limit of Rs 20,000) and introduction of the electoral bonds. It will take effect from 1 April, 2018.

Key Facts

• The finance bill lays out the way ahead for capping cash funding and sale of electoral bonds by proposing amendments in the section 13A of the Income-Tax Act, 1961 and to Reserve Bank of India Act, 1934.
• The amendment to I-T Act will provide political party exemption if the donation not exceeding Rs. 2,000 is received through instruments such as cheque, draft, electronic clearing system or electoral bond.
• The amendment of RBI Act will facilitate introduction of electoral bonds. These bonds will be instrument to donate money to political parties and the RBI will acts as the intermediary.
• Donors can purchase bonds only through cheque or digital mode, helping to track record of the source of the purchase.
• These bonds shall be redeemable only in the designated account of a registered political party and within the prescribed time limit from issuance of bond.
• The bond bearer’s identity will be unlikely revealed in the books of the political party and the recipient party will also remain unknown.

Month: Current Affairs - February, 2017