Section 80GGC

Section 80GGC of the Income Tax Act provides tax deductions for contributions made to political parties. This can range from 50% to 100% of the amount contributed. This provides a great deal of tax saving while encouraging a strong political system.

Section 80GGC of the Income Tax Act deals with any contributions made by an individual to a political party. Under Section 80GGC Individuals can avail of tax deductions that range from 50% - 100% of the contribution amount. As per the Income Tax Act, an individual can donate as much as 10% of his or her gross earning to any political organization of his or her choice.

Individuals who avail of deductions under Section 80GGC have the advantage of saving on a sizeable portion of tax every financial year in tandem with other deductions such as House Rent Allowance, Medical Allowance and much more.

Features of Section 80GGC

The main features of Section 80GGC are:

  • Deductions under this section can be availed only by individuals ie: non-corporate assessees or taxpayers
  • This section came into existence via the Finance Act 2009, with the objective of introducing transparency into electoral funding as well as making it corruption free
  • Deductions under this section fall under Chapter VIA deductions. This means that the total amount of deduction allowed cannot be more than the total taxable income of the individual
  • Deductions under this section are not applicable on tax deducted at source on an individual’s salary. Only employees who draw a salary with no other income from other businesses can avail deductions under this section while filing their tax returns.

Eligibility Criteria under Section 80GGC

Taxpayers looking to avail of deductions under Section 80GGC are required to fulfil the following eligibility criteria:

  • The taxpayer or assessee can be any individual or person
  • The taxpayer or assessee cannot be a local authority
  • The taxpayer or assessee cannot be an Artificial Judicial Person, who receives funding from the government either partially or completely
  • Companies cannot avail of deductions under this Section

Entities to which Donations or Contributions can be made under Section 80GGC

As per Section 80GGC, an individual can make a donation or contribution only to the following entities:

  • An electoral trust
  • Any political party that has been registered under Section 29A of the Representation of the People Act, 1951

Amount of Deduction that can be claimed under Section 80GGC

Individuals who make donations to any political party can claim deductions of up to 100 per cent of their contribution to said party. By doing so, the total taxable income of the individual is lowered in proportion to the contribution he/she has donated to the concerned party. In other words, the entire amount of a taxpayer or assessee contribution to a legitimate political party will be allowed as a deduction from his or her taxable income.

Procedure to avail of Deductions under Section 80GGC

  • Taxpayers or assessees looking to claim deductions under Section 80GGC can do so while filing their tax returns simply by including the amount of their contribution to a political party in the space provided for Section 80GGC in the Income Tax Return form. This Section appears under Chapter VI-A deductions in the Income Tax Return form.
  • Donations made to political parties should be made solely through legitimate banking portals such as online internet banking, cheques, debit cards, credit cards, demand drafts etc. in order to claim deductions under this section.

Exceptions under Section 80GGC

There are certain exceptions under which contributions made to political parties will not be eligible for deductions. These exceptions are as follows:

  • Any donations or contributions made in monetary form or cash are not eligible for deduction under Section 80GGC. This exception to the rule was brought into effect on the 1st of April 2014 and applies to every financial year commencing from the year 2014-2015 and beyond.
  • Any donations or contributions to any political party that are made in kind are also not eligible for deduction under Section 80GGC. This includes gifts or Favours of any kind.

FAQs About Section 80GGC

1. What is Section 80GGC?

Section 80GGC of the income tax act allows deductions on contributions made by an individual towards an electoral trust or a political party.

2. Is an Indian company eligible to claim a deduction for donations made to a political party?

Yes, An Indian company can claim a deduction for donations made to a political party or electoral trust under Section 80GGB of the Income Tax Act.

3. Can a government organization donate to political parties?

No, a government organization is not eligible for making donations to political parties.

4. Can I save more than Rs.30,000 by making a donation to a political party?

Yes,You can get a 100% deduction on your contribution made to a political party

5. Can I claim deductions if I donated to multiple political parties?

Yes. You can claim a 100% deduction on contributions towards multiple political parties.

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