ELECTORAL
TRUSTS - POLITY
News:
Electoral trusts since
2014 have also weighed in favour of BJP
What's
in the news?
●
The recently disclosed roster of corporate
donors to political parties via electoral bonds is currently under scrutiny,
despite the fact that many of these entities have been regular contributors,
dispensing substantial amounts to political parties via electoral trusts.
Key
takeaways:
●
The latest electoral trust data revealed
that five electoral trusts gave political parties ₹366 crore in 2022-23,
including ₹259.08 crore going to the ruling BJP.
●
Megha Engineering and Infrastructure, the
second-highest electoral bond giver, also donated Rs 87 crore to Prudent, the
richest electoral trust that favours the BJP.
Electoral
Trusts:
Purpose:
●
Electoral trusts are established by companies to manage and distribute contributions
received from other companies and individuals to political parties.
Eligibility:
●
Only companies registered under section 25 of the Companies Act, 1956,
are eligible to apply for approval as electoral trusts.
Anonymity:
●
Currently, the names of electoral trusts
do not reveal the identities of the companies or groups that established them.
Persons
who can Contribute:
●
Indian citizens
●
Companies registered in India
●
Associations of persons (Indian residents)
Persons
who cannot Contribute:
●
Non-Indian citizens
●
Other approved electoral trusts
●
Contributors without PAN
●
NRIs without a passport number
Allocation
of Funds:
●
Electoral trusts can allocate a maximum of
5 percent of total funds collected
during a financial year for administrative
expenses.
●
The remaining 95 percent, including any surplus from the previous financial year,
must be distributed to eligible
political parties.
Governing
Laws/Rules:
●
The Central Government amended the Income Tax Rules, 1962, on January 31,
2013, to include Rule 17CA, outlining the functions of electoral trusts
approved by the Central Bureau of Direct Taxes (CBDT).
●
The Central Government introduced ‘The
Electoral Trusts Scheme, 2013,’ specifying the eligibility criteria,
registration procedure, and format for registration of electoral trusts.