The government introduced the Electoral Bond Scheme in the Finance Bill 2017 and implemented this scheme in 2018. Under this scheme, electoral bonds are issued, which are instruments or securities used to donate funds to political parties. These bonds are similar to bearer bonds or promissory notes, where the issuer (bank) is the custodian and pays the bondholder (political party). Individuals and entities can purchase electoral bonds by making payments from a bank account. The electoral bonds will not have the name of the payee. It will have a life of only 15 days , during which it can be used to make donations to political parties.Electoral bonds are available for purchase for only 10 days in January, April, July, and October, as specified by the Central Government. The Centre can specify an additional 30-day period in a general election year. The electoral bonds are issued or can be purchased for any value in the multiples of Rs.1,000, Rs.10,000, Rs.1,00,000, Rs.10,00,000 and Rs.1,00,00,000. There is no maximum applicable limit on the contributions made to political parties, under Section 80 GGB of the Income Tax Act. But as per the Companies Act 2013, companies can contribute up to 7.5% of their annual net profit (three years average). It is necessary that the respective company discloses the amount contributed and the name of the political party in its Profit and Loss account for the said financial year.
If the amount has been contributed via electoral bonds, then there is no requirement for mentioning the name of the party in the Profit and Loss Account of the company. Only the amount paid has to be mentioned.