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In a major boost to the process of cleaning election funding, Finance Minister Arun Jaitley announced that the maximum donations in cash to political parties have been reduced to Rs 2,000. Earlier political parties could receive cash donations to the tune of Rs 20,000. Jaitley stated that under the present system, a large number of anonymous donations were being made to parties.
Any donations above Rs 2,000 would have to be made either through cheques or through digital means. Jaitley further stated that the RBI Act would be amended to allow for the issuance of electoral bonds. These bonds can be purchased by those wanting to donate to political parties through banks and other financial institutions, These bonds can then be redeemed by only registered political parties.
Jaitley further cautioned parties against flouting these new norms. The Finance Minister said that political parties would be allowed to avail income tax exemtions on their income only if they followed the new norms announced in the budget.