HomeLifestyleExplainer: What are electoral bonds, do you get returns and income tax...

Explainer: What are electoral bonds, do you get returns and income tax benefits even after investing money in it?

Highlights

You can donate to the party of your choice through this bond.
You can neither return it to the bank nor will you get any interest on it.
After purchasing the bond, the customer gives it to the party of his choice and she takes money from the bank.

New Delhi. In 2018, the Modi government had issued bonds to raise funds on behalf of political parties, which are called electoral bonds. As an investor, you would know that the purpose of a bond is to borrow from the market, but knowing the word bond, it makes sense that you will get interest and returns on buying it. Now the question arises that will you get interest and returns even after buying electoral bonds?

It is well known that every year political parties ask people for donations for the expenditure in elections. Since a huge amount is spent in these elections, the donation received for this is also very large. Obviously, a large amount of black money is consumed to use big money as donations. To end this manipulation of money through donations, the Modi government had issued electoral bonds in 2018. You can donate to the party of your choice through this bond.

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What is the return
If you are thinking that the money you are giving to political parties by buying this bond will be available on the return of the bond, then it is not so at all. This bond acts like a receipt. That is, you will not get any return on this, but you will buy this bond in the name of the party to which you want to donate and the money will be given to the political party concerned. You can neither return the bond to the bank nor will you get any interest on it.

How do parties get money
Every electoral bond purchased by you has a life and the parties have to redeem the bond and take their money from the banks within this stipulated time. If a party fails to do so, then its bond is canceled and the money is returned to the buyer of the bond. For this, the parties are given 15 days and it is necessary to redeem the bond within this time limit. After purchasing the bond, the customer gives it to the party of his choice and she takes money from the bank.

KYC required to buy
Banks sell electoral bonds to only those customers whose KYC is verified. The name of the donor will not be on the bond and will be kept confidential. However, the details of the buyer of the bond will definitely be with the bank. The Supreme Court has decided that you will be able to give electoral bonds to a party that has secured at least 1 percent of the vote in the recent Lok Sabha or Assembly elections.

What is necessary for parties
Political parties will have to open their account in the bank to get electoral bonds. This account will be verified by the Election Commission. Only after this the parties will be able to put the bond money in their account. It is not that you can buy this bond whenever you want. For this, the date will be fixed in advance. Till now, bonds could be issued only for 75 days in a year, now the government has changed the rule to 85 days.

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Then what is the benefit to the buyer of the bond?
If you want to donate money to a political party, instead of giving money directly, you can deposit money through electoral bonds. In lieu of this, you will get tax exemption on the money given. This exemption is given under section 80GGC and 80GGB of income tax. Although the entire money invested in buying the bond is taxable, but the amount should not exceed the total taxable income of the individual taxpayer. In case of companies, this amount should not exceed 7.5 per cent of their total net profit for three years.

Tags: business news in hindi, Electoral Bond, Income tax exemption, Modi government

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