On Wednesday, February 15, the SC gave a historic verdict and rejected the recognition of Electoral Bonds, declaring them unconstitutional. A bench of 5 judges led by Chief Justice of India DY Chandrachud gave this decision. There has been a long-standing demand from opposition parties to quash these. A five-judge Constitution bench headed by the Chief Justice of India highlighted that “a voter must effectively exercise his freedom to vote. “Requires information about the financing a political party receives”.

CJI DY Chandrachud said that the changes made in the laws to implement the scheme are unconstitutional. Holding the scheme to be a “violation” of the constitutional right to freedom of speech and expression and right to information, the court did not agree with the Centre’s contention that it aimed to bring transparency and curb black money in political funding.

What are Electoral Bonds?

Electoral Bonds are promissory notes that any Indian citizen and company can buy from some State Bank of India branches. A citizen or a private company can donate these bonds to his favourite political party.

When and who started these bonds?

The NDA coalition government introduced it in 2018, along with the Finance Bill 2017 and implemented them on January 29, the same year.

What was its motive, and how did these electoral bonds benefit political parties?

The government cited the reason behind implementing this: it can bring transparency to political funding. The government used to withdraw money from the bank by selling the bonds purchased by an Indian citizen or company in the party’s name, which they benefited from during elections. The bank also had rules in this process, such as only those whose accounts were KYC verified could buy bonds from the bank, and the bank leaders could give information about those buying the bonds at any time.

Did bond buyers get any benefit from it?

Investors who invested in electoral bonds have yet to get any official returns. This bond was similar to a receipt. The bonds were purchased in the name of the party you wanted to donate to, and the money was provided to the concerned political party.

Do those who buy electoral bonds get tax exemption?

There is a provision to give exemption under sections 80GGC and 80GGB of income tax on the amount donated through electoral bonds instead of donating directly to the political party.