{"id":62439,"date":"2025-12-23T18:22:00","date_gmt":"2025-12-23T12:52:00","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=62439"},"modified":"2025-12-23T18:24:47","modified_gmt":"2025-12-23T12:54:47","slug":"electoral-trusts","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/23-12-2025\/electoral-trusts","title":{"rendered":"Electoral Trusts"},"content":{"rendered":"\n<p><strong>Syllabus: GS2\/Polity &amp; Governance<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>With the scrapping of the <strong>electoral bonds scheme,<\/strong> companies have again turned to <strong>electoral trusts<\/strong> as a preferred source of political donations for companies in 2024-25.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Electoral Trust Scheme<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The electoral trust scheme was introduced by the <strong>government in 2013.\u00a0<\/strong><\/li>\n\n\n\n<li>Electoral trusts are one of the <strong>funding channels for political parties.\u00a0<\/strong>\n<ul class=\"wp-block-list\">\n<li>They became a <strong>preferred source of political donation<\/strong> for companies in <strong>2024-25 after the SC scrapped the electoral bonds<\/strong> scheme in 2024.<\/li>\n\n\n\n<li><strong>Both schemes<\/strong> are meant to facilitate donations to political parties by corporations and individuals.\u00a0<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>It is regulated by the <strong>Central Board of Direct Taxes (CBDT)<\/strong> under the <strong>Electoral Trust Scheme, 2013.<\/strong><\/li>\n\n\n\n<li><strong>Eligibility for Electoral Trust and Donations: <\/strong>Any company registered under the Companies Act can form an electoral trust.\u00a0<\/li>\n\n\n\n<li>Any citizen of India, a company registered in India, or a firm or Hindu Undivided Family or association of persons living in India, can donate to an electoral trust.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>How many electoral trusts does India have?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>While just five trusts reported contributions in 2023-24, the number increased to nine in 2024-25.\u00a0<\/li>\n\n\n\n<li>Of these nine, three trusts \u2014<strong> Prudent Electoral Trust, Progressive Electoral Trust and New Democratic Electoral Trust <\/strong>\u2014 accounted for 98 per cent of all contributions in 2024-25.\u00a0<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>How do These Trusts Function?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Renewal Requirement:<\/strong> Electoral trusts must apply for renewal every three financial years to continue operating.<\/li>\n\n\n\n<li><strong>Eligible Beneficiaries: <\/strong>Donations can be made only to political parties registered under Section 29A of the Representation of the People Act, 1951.<\/li>\n\n\n\n<li><strong>Mandatory Disbursement Rule: <\/strong>At least 95% of total contributions received in a financial year must be donated to eligible political parties.\n<ul class=\"wp-block-list\">\n<li>The remaining 5% may be used only for administrative expenses.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Disclosure of Donor Identity: <\/strong>PAN is mandatory for resident Indian contributors.\n<ul class=\"wp-block-list\">\n<li>Passport number is required for NRIs at the time of contribution.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Mode of Contribution: <\/strong>Trusts receive voluntary contributions from Indian citizens, domestic companies, firms, or Hindu Undivided Families (HUFs) via cheques, bank drafts, or electronic transfers.<\/li>\n\n\n\n<li><strong>Transparency: <\/strong>The electoral trust route is fully transparent, with disclosure of both contributors and beneficiaries, unlike electoral bonds.<\/li>\n\n\n\n<li><strong>Use of Funds: <\/strong>Trusts cannot use donations for the benefit of their members or any purpose other than permitted administrative expenses and political contributions.<\/li>\n\n\n\n<li><strong>Accounting &amp; Oversight: <\/strong>Trusts must maintain audited accounts, disclosing donors, recipients, and disbursements to the CBDT and the Election Commission of India (ECI).<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-background has-fixed-layout\" style=\"background-color:#fff2cc\"><tbody><tr><td><strong>Electoral Bonds<\/strong><br><br>&#8211; Government of India notified the <strong>Electoral Bond scheme in 2018.<\/strong><br>&#8211; An electoral bond is like a<strong> promissory note<\/strong> that can be bought by <strong>any Indian citizen or company incorporated in India<\/strong> from select branches of State Bank of India.\u00a0<br>a. The citizen or corporate <strong>can then donate<\/strong> the same to any <strong>eligible political party of his\/her choice.\u00a0<\/strong><br>&#8211; <strong>Anonymous Donation:<\/strong> The electoral bonds will not bear the name of the donor. Thus, the political party might not be aware of the donor&#8217;s identity.<br>&#8211; <strong>Tax exemption:<\/strong> A donor will get a deduction and the recipient, or the political party, will get tax exemption, provided returns are filed by the political party.<br>&#8211; <strong>The Supreme Court has struck down the Electoral Bonds Scheme,<\/strong> the Scheme is violative of the Right to Information under Article 19(1)(a).\u00a0<br>a. They also infringe on the principle of free and fair elections as stipulated in the constitution.<br>&#8211; While the <strong>electoral bonds scheme<\/strong> sought to ensure donor anonymity, <strong>electoral trusts are required to report to the Election Commission contributions<\/strong> from individuals and companies, and their donations to parties every year.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><strong>Source: <\/strong><a href=\"https:\/\/indianexpress.com\/article\/explained\/explained-politics\/what-are-electoral-trusts-and-how-are-they-funded-explained-10433139\/\" target=\"_blank\" rel=\"noopener\"><strong>IE<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p><strong>Context<\/strong><\/p>\n<li class=\"ms-5\">With the scrapping of the electoral bonds scheme, companies have again turned to electoral trusts as a preferred source of political donations for companies in 2024-25.<\/li>\n<p><\/p>\n<p><strong>Electoral Trust Scheme<\/strong><\/p>\n<li class=\"ms-5\">The electoral trust scheme was introduced by the government in 2013.\u00a0<\/li>\n<li class=\"ms-5\">Electoral trusts are one of the funding channels for political parties.\u00a0<\/li>\n<li class=\"ms-5\">They became a preferred source of political donation for companies in 2024-25 after the SC scrapped the electoral bonds scheme in 2024.<\/li>\n<p><a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/23-12-2025\/electoral-trusts\" class=\"btn btn-primary btn-sm float-end\">Read\u00a0More<\/a><\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-62439","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/62439","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=62439"}],"version-history":[{"count":3,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/62439\/revisions"}],"predecessor-version":[{"id":62443,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/62439\/revisions\/62443"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=62439"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=62439"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=62439"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}