Why in the News?

After a three-day hearing, the Supreme Court has reserved its judgment on the challenge to the Central government’s Electoral Bonds Scheme.

About Electoral Trusts (ET):

• As per Section 17CA of Income Tax Rules (1962), an Electoral Trust (ET) is a non-profit organization established for the orderly receipt of voluntary contributions from any person for distributing the same to political parties, registered under Section 29A of the Representation of People Act, 1951.
• This Scheme was notified in January 2013 by the then UPA government.
• Objective of Electoral Trust:
• Electoral Trusts are designed to bring more transparency in the funds provided by corporate entities to the political parties.
• The objective of an Electoral trust is not to receive any profit or pass on any direct or indirect benefit to its members or contributors.
• An Electoral trust will distribute funds only to eligible Political parties.
• These trusts are approved by the Central Board of Direct Taxes (CBDT) in accordance with the Electoral Trust Scheme of 2013.
• The ET may receive voluntary contributions from:
• an Individual (citizen of India)
• a Company registered in India  
• a Firm or HUF or Associations of Persons or Body of Individuals resident in India
• The electoral trusts have to apply for renewal every three financial years.