Section 80GGC: Tax Benefits to certain persons Individuals on Political Donations

Introduction A person supports a political party not only by expressing unity or sharing ideas with the party but also in tax evasion. Political contributions are made to cover expenses incurred by a political party especially in election campaigns. Indian companies and individuals are allowed to donate but not in cash. This donation is eligible for deduction when calculating the total income of the company or individual. Proof of expenses should be kept to confirm those processes. People who prefer tax deductions in support of political parties, therefore have the benefit of saving a good portion of tax under Section 80GGC and other exemptions such as House Rent Allowance, Medical Grant and the like. This Section was introduced by the Finance Act of 2009.

Updated on:  
15min

1. What is Section 80GGC?

Section 80GGC is defined under the Income Tax Act of 1961 for the benefit of those who make donations to political parties. There are certain terms and conditions that must be followed by each person in order to receive the stated benefits. One must be aware of the eligibility and limit of deductions in order to obtain a tax deduction. To summarize the definition of Section 80GGC, we specify the withholding of money under the Income Tax Act allowed from the total income of auditors specified by contributions made to a political party or electoral trust. The total amount is taxable as long as it is not funded, but invested in other waysOne can identify the main features of Section 80GGC as follows:

  • The purpose of the Section was primarily to allow for transparent election funding, therefore, we have tried to keep it free of corruption. In addition, it also encourages additional voluntary contributions made by taxpayers to political parties.
  • Tax deductions are made for certain testers
  • Deductions fall under Chapter VI-A deductions , which means that the total amount that can be tax deductible cannot be higher than the total taxable income.

2. What is the eligibility criteria u/s 80GGC?

  • Section 80GGC may be demanded by any person other than any local authority or juristic person sponsored by the state or part of the government. The following groups are specified under Article 80GGC to make a political contribution - individual, Individual Hindu Family (HUF), company, AOP or BOI and Legal Practitioner. Last person on the list
  • must not be sponsored by the government.
  • Tax benefits can also be made by making donations to many political parties instead of just one.
  • Deduction Limit- Although every donation is eligible for cash deduction, it must be ensured that the donation method should never be cash.

3. Exceptions to Section 80GGC

  • Donations or donations made in cash or in kind are not tax deductible. This Section Amendment has been implemented from the 2013-14 financial year onwards.
  • The contribution of a political party should not be made in cash or in kind. One can use other bank donation methods such as check, draft application, transfer, debit or credit card or internet banking.
  • Every contribution is allowed to be tax deductible if it exceeds the taxable income of a qualified employer.

4. Procedure to avail the deductions under 80GGC

The procedure for obtaining the tax deduction referred to under Section 80GGC is simple and appropriate. A taxpayer may file his or her tax return by submitting a specified contribution amount

to the space provided under Section 80GGC on the Income Tax Return form. The section appears under Chapter VI-A of the Income Tax Return form. Withdrawals can be obtained by donating in any form of cash including online banking, checks, debit cards, credit cards, draft claim etc.

Details of donations must be submitted to the employer for submission of form 16. If not, details will be provided in the specified column when submitting tax returns. The political party will issue a receipt containing the party's name and address, the amount awarded, and the party's PAN and TAN. This contribution is deducted directly from the salary, and the receipt for the contribution is in the employer's name. An employee may require a deduction if he / she has this certificate from the employer, confirming that the contribution has been deducted from the employee's salary account.

5. Difference between Section 80GGC and 80GGB

Section 80GGC and Section 80GGB are very similar in their actions to enforce tax benefits. However, the main difference is the classification of donors.

SECTION 80GGC SECTION 80GGB
Only named taxpayers can claim benefits. Companies are eligible for profits. In accordance with Section 80GGB of the Income Tax Act 1961, any Indian company that donates any sum to a political party or fund registered in India may apply for a deduction from its contribution.

At present, some Categories such as Section 80G allow for deductions made in the case of donations and charities

As per Section 80GGB of the Income Tax Act 1961, any Indian company that contributes any amount to a political party or electoral trust registered in India may apply for a deduction from its contribution amount.

A person must produce the following documents required for tax deduction.

  • A receipt issued by a political party or electoral trust to prove proof of donations. It must contain the name, address, PAN, TAN, organization / fund registration number, donor name, payment method and the given name and number.
  • Income Tax Return Return form is required to be completed and submitted. The above information will be required for the same.

6. Conclusion

The decision to donate to a political party must be made through proper research and analysis so that the money can be spent faithfully in the greater good. It is very important to have a detailed record of your tax deductions. All the rules of the Income Tax Act must be properly followed in order to obtain tax deductions and benefits; if not, the application is liable for refusal. These donations are tax-free and make it much easier for political parties.

Frequently Asked Questions

question_icon

What documents are required to avail deduction under 80GGC of the IT Act?

answer_icon

A person must produce the following documents required for tax deduction.

  • A receipt issued by a political party or electoral trust to prove proof of donations. It must contain the name, address, Pan Number, registration / trust registration number, name of the donor, payment method and the value of the names and numbers.
  • Income Tax Return Return form is required to be completed and submitted. The above information will be required for the same.


question_icon

I am an individual and have made donations to a political party. Can I claim deduction on that?

answer_icon

Yes, he may require a deduction from a donation made to a political party under section 80GGC of the Income Tax Act, 1961.


question_icon

Can corporations make political contributions?

answer_icon

Yes. An Indian company can make a political contribution and can apply for a deduction under 80GGB.


question_icon

Can I save more than 30000 Rs by giving a donation to a political party under section 80GGC?

answer_icon

There is a 100% deduction available for donation / s 80GGC, if the donation is made in any mode without cash.


question_icon

How much is the tax deduction allowed on amounts donated to a political party in India?

answer_icon

100% of the value given as such, as long as it is donated in any way without cash.


CEO Krishna Gopal

Krishna Gopal Varshney is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Myitronline.com. Myitronline is amongst the top emerging startups of Asia and authorized ERI by the Income Tax Department. A dedicated and tireless Expert Service Provider for the clients seeking tax filing assistance and all other essential requirements associated with Business/Professional establishment. Connect to us and let us give the Best Support to make you a Success. ”

Krishna Gopal Varshney
Co-founder & CEO