Section 80GGC of the Income-tax Act, 1961, permits an individual to claim a tax deduction for any donations or contributions made towards any political party. So, if you opt for such tax deductions, you have the opportunity to save a good portion of income tax under Section 80GGC apart from other exemptions such as medical allowance, house rent allowance, etc.
To clearly understand the details of Section 80GGC of the Income-tax Act,1961 check out below!
Section 80GGC provides for tax deductions with respect to donations made by taxpayers towards political parties or any electoral trusts. Section 80GGC of the Income Tax Act was introduced to bring about transparency in electoral funding and free it from corruption. It also encourages individuals to financially support the political system and claim tax deductions against such donations to lower their tax liability.
Any person other than:
Thus, any individual, Hindu Undivided Family (HUF), an AOP or BOI, a firm, and an artificial juridical person which is not wholly or partly funded by the government are eligible to claim deduction under Section 80GGC.
It is also necessary to keep in mind the taxpayer must pay the taxes under the old tax regime to claim the benefit under section 80GGC.
Click here to learn the difference between the new and old tax regimes.
Deduction under 80GGC can be claimed only if you make donations or contributions to:
Note: Political parties must be registered under section 29A of the Representation of the People Act, 1951. Any donation/contribution made to any other political party would not qualify for deduction u/s 80GGC.
There is a certain limitation for deduction under Section 80GGC of the income tax. Here is the list of the 80GGC exemption limit:
In order to become eligible for claiming tax deduction under this section, you have to submit the following documents:
Under Section 80GGB of the Indian Income Tax Act, any Indian company making contributions to political parties can claim a deduction for the donated amount.
Similarly, under Section 80GGC, individual taxpayers can claim a deduction for the amount donated to political parties.
These are the following scenarios in which individuals are ineligible to claim a tax deduction under Section 80GGC:
Section 80GGC of the Income Tax Act aims to ensure transparent electoral funding and minimise corruption. It encourages individuals to financially support the political system by allowing them to claim tax deductions for such donations, thereby reducing their tax liability.
The procedure for obtaining the tax deduction referred to under section 80GGC is quite simple and convenient to follow.
You can file the income tax return as you generally do. However, while filing the ITR, you have to submit the amount of the contribution under section 80GGC in the allotted space. If you are a salaried individual, you must submit relevant details of the donation to your employer so that he/she can include the same in the Form 16.
The party should acknowledge the donation made to that political group. You will also have to provide the TAN and PAN of the political party when you claim the deduction. In addition, you can claim a deduction only if your employer issues a certificate stating that a deduction took place from your account.
To avail of Section 80GGC tax benefit, you should opt to pay taxes under the old tax regime and you should have a detailed record of the donation you made. Accordingly, it is important to follow all relevant regulations of the Income Tax Act. Do remember that you are not eligible for any deduction if you make any donations in kind to the political party and this includes gifts as well.
Section 80GGC of Income-tax Act allows deduction for donations to political parties, promoting transparency. Individuals, HUF's, and certain entities can claim this deduction. Cash/ kind donations not eligible. Documents like receipt, complete income tax return form required. Taxpayers must pay taxes under the old regime to avail benefits. Claims made through legitimate banking portals.