The recent Supreme Court decision to end the electoral bond scheme has stirred up discussions in India’s political sphere. Concerns are rising within the Election Commission about the return of unaccounted cash as the main funding method. This crucial verdict, announced just yesterday, has sparked debates about alternative funding options and how they’ll impact political parties preparing for the upcoming elections. Additionally, citizens are uncertain about how this decision will affect their tax deductions.
Understanding Electoral Bonds
Electoral bonds were introduced as a mechanism to bring transparency to political funding in India. Essentially, these were financial instruments that allowed individuals and corporations to donate money to political parties anonymously. The idea was to reduce the influence of black money and promote clean and transparent funding for political parties. However, their implementation was marred by controversy and criticism, particularly due to concerns over the lack of transparency and accountability in the process. Despite these issues, electoral bonds were credited with significantly reducing the use of unaccounted cash in political funding, albeit temporarily.
Reasons Behind the Supreme Court’s Decision
The Supreme Court’s decision to strike down the electoral bond scheme was driven by significant legal and constitutional considerations. The court ruled that the scheme, by allowing for anonymous political donations, violated the fundamental right to information enshrined in Article 19(1)(a) of the Constitution. It emphasized that this right goes beyond merely safeguarding freedom of speech and expression; rather, it serves as a cornerstone of participatory democracy by ensuring government accountability. Furthermore, the court highlighted the intrinsic value of the right to information, emphasizing that it is not merely a means to an end but an essential end in itself.
Parties Benefiting from Electoral Bonds
The electoral bond scheme facilitated significant financial support for various political parties, with the State Bank of India selling a total of Rs 16,518.11 crore worth of electoral bonds to date. Among the beneficiaries, the Bharatiya Janata Party (BJP) stood out, receiving nearly 55% of the total value of bonds sold between 2017-2018 and 2022-2023, amounting to Rs 6,564 crore. In contrast, the Congress party received 9.5% of all bonds sold during this period, totaling Rs 1,135 crore, while the Trinamool Congress garnered Rs 1,096 crore.
Regional parties also reaped substantial sums through electoral bonds. In the fiscal year 2022-23 alone, the Bharat Rashtra Samithi emerged as the top recipient among regional parties, securing Rs 529 crore through this funding mechanism. Following closely behind was the Trinamool Congress, which received Rs 329 crore, trailed by the Biju Janata Dal (BJD) with Rs 152 crore and the Yuvajana Sramika Rythu Congress Party (YSR Congress) with Rs 52 crore. Notably, these parties had received even larger sums of money through electoral bonds in the preceding fiscal year, with the TMC, DMK, BJD, and YSR Congress leading in terms of funding received.
The Impact on Political Parties
The recent demise of the electoral bond scheme leaves political parties facing a pivotal decision regarding their funding sources, especially with the Lok Sabha Election 2024 looming on the horizon. Notably, parties such as the BJP and regional players like Trinamool Congress, DMK, BJD, and YSRCP had come to heavily rely on electoral bonds for their financial support. For instance, these bonds constituted a significant portion of Trinamool Congress’s total receipts, amounting to a staggering 97% in the fiscal year 2022-23.
Post-Supreme Court Verdict – Next Steps and Implications
Here are the actions mandated after the Supreme Court verdict on electoral bonds:
- Cessation of Issuance: The issuing bank is directed to immediately halt the issuance of electoral bonds.
- Submission of Purchase Details: The State Bank of India (SBI) is instructed to provide the Election Commission of India (ECI) with details of electoral bonds purchased since the interim order of the Court dated April 12, 2019. This information must include the date of purchase, name of the purchaser, and denomination of each electoral bond.
- Disclosure of Party’s Details: SBI must also submit to the ECI the details of political parties that have received contributions through electoral bonds since the interim order dated April 12, 2019. These details should encompass each electoral bond encashed by the political parties, including the date of encashment and the denomination of the electoral bond.
- Submission Timeline: SBI is required to furnish the above information to the ECI within three weeks from the date of the verdict, specifically by March 6.
- Publication by ECI: The ECI is mandated to publish the information received from SBI on its website no later than March 13, 2024.
- Return and Refund: Electoral bonds that are still within the validity period of 15 days but remain unencashed by political parties must be returned by the parties to the purchasers. Subsequently, the issuing bank will refund the amount to the purchaser’s account.
Impact on Citizens: Tax Deduction Concerns
The Supreme Court’s verdict on electoral bonds has raised concerns among citizens regarding the tax deductions they may have claimed under purchases offering 100% tax deduction. Typically, court decisions and tax changes take effect after the date of announcement. Therefore, it’s crucial for citizens to await official clarification from the Central Board of Direct Taxes (CBDT) regarding the implications of the verdict on their tax deductions.