Multiple Choice Questions

Consider the following statements with respect to Electoral Trusts They are interest free bearer ins...........

Indian Political System(PCS) Electoral System

Consider the following statements with respect to Electoral Trusts

They are interest-free bearer instruments to donate money to political parties that was announced in the 2017 Union Budget.
It can be formed by any company registered under Section 25 of the Companies Act, 1956.
Electoral Trusts must donate 95% of contributions received in a financial year to political parties.

How many of the statements given above is/are correct?

Only One

Only Two

All Three

None

Only statements 2&3 are correct.

Electoral Trusts

An Electoral Trust is a trust set up by companies to distribute contributions received from other companies and individuals to political parties.
The Electoral Trusts Scheme was introduced by the UPA government in 2013.
The scheme was meant to facilitate donations to political parties by corporates and individuals.
Any company registered under Section 25 of the Companies Act, 1956, can form an electoral trust.
Under the Income-tax Act, 1961, 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.

Under the Income-tax Act, 1961 the donation to the electoral trust can be provided by the following:

The electoral trusts have to apply for renewal every 3 financial years.

They must donate 95% of contributions received in a financial year to political parties registered under the Representation of the People Act, 1951.
The contributors’ PAN (in case of a resident) or passport number (in case of an NRI) is required at the time of making contributions.

Hence option 2nd is correct.

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