Personal Finance

Donate to political parties and opt for electoral bonds

GURUMURTHY K | Updated on January 28, 2018

Bonds can be bought only through a cheque, demand draft or electronic transfer

The electoral bonds will not earn interest for the buyer

The proposal made in Budget 2017 to introduce electoral bonds for funding political parties fructified earlier this month. The Finance Ministry has released the details of the electoral bond scheme on January 2. Here’s how you can use the same to fund your favourite political party.

What is it?

The Electoral Bond Scheme is latest option for an individual looking to donate to registered political parties.

The other options that are already in place are donating through cash (only up to ₹2,000) and donations by cheque or other digital modes if the amount is more than ₹2,000.

The Electoral Bond Scheme differs from other modes as the identity of the donor will be unknown.

The political party will not be aware of the donor as the bond will not have the name of the donor. In other forms of donations, the political parties need to maintain records for donations over ₹20,000.

This electoral bond will be a bearer instrument in the nature of a Promissory Note. Unlike fixed income instruments, these electoral bonds will not earn any interest for the purchaser.

These bonds can be encashed only by the political parties registered under Section 29A of the Representation of the People Act, 1951 (43 of 1951); they must have secured not less than one per cent of the votes polled in the last general election to the House of the People (Lok Sabha) or the Legislative Assembly.

Though the entire list of registered political parties, both national and state, are available on the Election Commission of India website, a separate list of those parties that qualifies for accepting the electoral bonds is not available now. Hence, you must do your due diligence before donating.


Electoral bonds can be obtained only from the State Bank of India (SBI), from branches designated to issue the same.

The Government has designated 53 branches of SBI spread across the country to provide the bonds and these branches are located at the State or Union Territory capital. The electoral bonds are issued in denominations of ₹1,000, ₹10,000, ₹1,00,000, ₹10,00,000 and ₹1,00,00,000 and multiples thereof. A donor interested in buying this bond can either walk into the designated SBI branch or apply online.

Details required in the form to be filled up include Permanent Account Number (PAN) and any one proof of identity like passport, Aadhaar or Voter Identity number. However, as mentioned above, the identity will not be revealed and will not appear in the bond. If needed, SBI can ask for additional documents as a part of Know Your Customer (KYC) process.

The donor can pay by cheque, demand draft or do an electronic transfer. Upon verification, the bond will be issued to the buyer and is non-refundable.

The validity of this bond is limited to 15 days from the date of issue. If the political party fails to encash within this 15-day period, then the bond amount will go to Prime Minister Relief Fund.

As of now, the Government has decided that these bonds will be available only for ten days in first month of each quarter — that is in January, April, July, October every year. In addition to this, in the year of general elections, an extra window of 30 days will open for getting the bonds.

Donations made to political parties are eligible for tax deduction under Section 80GGC of the Income Tax Act. The deduction is available to the extent of the gross total income.

Published on January 28, 2018

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