Electoral bonds worth Rs 1,366 crore purchased in March

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Updated: April 30, 2019 6:51:51 AM

Further, over 77% of the bonds in terms of value was redeemed in designated State Bank of India branch in New Delhi, an RTI response to FE query revealed.

Experts said that the spurt in purchase of electoral bond was primarily due to the general election that commenced earlier this month.

A whopping `1,366 crore worth of electoral bonds were purchased in March this year, which is approximately the same as bought in the previous seven tranches since March 2018.

Further, over 77% of the bonds in terms of value was redeemed in designated State Bank of India branch in New Delhi, an RTI response to FE query revealed.

Experts said that the spurt in purchase of electoral bond was primarily due to the general election that commenced earlier this month.

Moreover, a buyer can claim nil income tax on the contribution under Sections 80GGC/80GGB of the Income-Tax Act, which further accelerated the purchase given March is the last month of a fiscal year. Electoral bonds as an instrument of funds for political parties were announced in FY18 budget, and became operational from March 1, 2018. An entity including an individual can purchase these bonds from designated SBI branches, and pass it on to an eligible political party.

The party can then redeem it within 15 days of issue before it expires. The buyer of the bond remains known only to the bank but not to other parties, which has raised concerns of opacity in political funding. But the money does come through banking channels so it’s not unaccounted.

Further, before March this year, 3071 bonds were sold in 7 phases amounting to `1,407.1 crore. While the bonds are available in five different denominations – `1,000, `10,000, `1 lakh, `10 lakh and `1 crore – the two highest denominations make up nearly 85% of the value of all bonds sold so far. This indicates that the instrument is being used widely by firms than individuals.

The RTI responses also revealed that only 32 bonds worth just over `12 crore (less than half percent of value of all bonds) expired without redemption. The law dictates that such amount be deposited in the Prime Minister’s Relief Fund. Since most parties haven’t filed their annual audit report for last fiscal and even FY18, the share of different parties in electoral bonds is not clear. However, in its audit report for FY18, Bhartiya Janata Party had declared that it received a large chunk – 95% of `222 crore – of bonds bought in March 2018.

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