RBI, Income Tax Acts to be amended for electoral bonds, Jaitley says

Electoral bonds have been announced as a scheme for cleansing political money under the Income Tax Act.

Paving the way for electoral reforms, finance minister Arun Jaitley on Tuesday said the government will amend several laws including the RBI Act and Income Tax Act to allow political parties to raise funds through electoral bonds.

Finance minister Arun Jaitley speaking in Lok Sabha (PTI photo)

Moving the Finance Bill in Lok Sabha for debate, Jaitley said: “Electoral bonds have been announced as a scheme for cleansing political money under the Income Tax Act.”

“The reality as we all know, a lot of electoral funding for political parties across the spectrum, comes by way of undisclosed money. And this is an issue which is public domain,” he said

Citing the Budget announcement, he said “we came out with the proposal that there will be income tax incentives involved in four different ways (for electoral bonds).”

One, money paid to a political party by cheque will be get tax breaks.

Second, the maximum cash donation will be allowed up to Rs 2,000, as recommended by the Election Commission, as compared with the present limit of Rs 20,000.

And fourth, investment in electoral bonds will be exempt from income tax, Jaitley said justifying the amendment in Income Tax Act as proposed in the Finance Bill.

Since the RBI will authorise a particular bank to issue the electoral bonds, the RBI Act will also be amended, he said.