Filing for AY 2024-25 is coming soon
Filing for AY 2024-25 is coming soon
Keep calm and sign up for early access to our super filing platform

Section 80GGC of Income Tax Act: Deduction Limit & Exceptions

By Ektha Surana

|

Updated on: Jan 22nd, 2024

|

5 min read

social iconssocial iconssocial iconssocial icons

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 Income Tax Act check out below!

What is Section 80GGC?

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.

Who can avail 80GGC deduction? 

Any person other than:

  • companies,
  • local authorities, and
  • artificial juridical person which is wholly or partly funded by the Government.

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.

Which contributions and donations can be deducted under section 80GGC?

Deduction under 80GGC can be claimed only if you make donations or contributions to: 

  • A political party; or 
  • An electoral trust. 

Note: Political party 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.

Section 80GGC deduction limits

There is a certain limitation for deduction under Section 80GGC of the income tax. Here is the list of the 80GGC exemption limit:

  • 100% of a taxpayer’s donation to a registered electoral trust or political party can be claimed as deduction. However, since this section is under Chapter VIA deductions, the total deduction cannot surpass the total income of an individual donating.
  • Contributions or donations to political parties or electoral trusts in cash or kind are not eligible for tax deductions of Section 80GGC. This amendment was brought into effect from 2013-2014 onwards.
  • Contributions or donations should be made to political parties through legitimate banking portals, such as internet banking, credit cards, debit cards, cheques, demand drafts etc. to claim deductions under Section 80GGC.
  • If you fail to provide sufficient documents while claiming the deduction and filing tax return, then the authority has the power to deny the tax deduction claim under this section.

Documents required for section 80GGC

In order to become eligible for claiming tax deduction under this section, you have to submit the following documents:

  • A receipt for proof of donation. 
  • The receipt must contain following details like PAN, TAN, address of the political party, fund registration number, payment method, and donor name.
  • Income tax return form must be completed and submitted within a specific time.

Exceptions to Section 80GGC deduction

  • When contributions to a political party are made through cash, they cannot be claimed as a deduction under this Section. 
  • When gifts or donations are made in kind, they cannot be claimed as tax deductions under this Section.

Difference between Section 80GGB and Section 80GGC

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.

In what situations is an individual ineligible to claim a tax deduction under Section 80GGC?

These are the following scenarios in which individuals are ineligible to claim a tax deduction under Section 80GGC:

1. Individuals who contribute to a political party using cash payments are not eligible for tax deductions under this section. Donations made through demand draft, cheque, or online payments are the accepted modes for qualifying tax deductions.

2. Individuals who provide gifts or donations in forms other than monetary contributions cannot claim tax deductions 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.

Procedures to avail tax deductions u/s 80GGC

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 for 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.

Conclusion

To avail of Section 80GCC tax benefit, 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.

Frequently Asked Questions

What amount of deduction is available under section 80GGC?

100% of the amount donated or contributed to the political parties or electoral trusts are allowed as deduction under section 80GGC. However, the deduction cannot exceed the individual’s total taxable income. The mode of donation or contribution to the political party or electoral trust should never be in cash. Therefore donations only made through authentic banking channels like online transfers, debit cards, internet banking, and cheque are eligible for this tax deductions.

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

Yes. This section does not provide a limit on the number of political parties towards which you can contribute. Thus, you can claim a 100% deduction for contributions made to multiple political parties.

Can I claim deductions if I donate to any political party of my choice?

You can claim a deduction only when you contributed to a political party registered with the Election Commission and considered an election body.

What is the meaning of electoral trust under Section 80GGC?

An electoral trust is a Section 8 company or a non-profit entity created in India to receive voluntary contributions from an individual and distribute them to the respective political parties. The objective of an electoral trust is to distribute the contributions received by it to some political party.

I work in a government organisation. Can I claim deductions under this section?

Yes, government employees can claim deductions for contributions or donations made to political parties under this section. However, they should not be directly or indirectly associated with any political party.

Can companies make political contributions?

Yes, corporates and companies can make political contributions under Section 80GGB of the Income Tax Act, 1961. But they cannot claim tax benefits on political contributions under this section.

About the Author

Multitasking between pouring myself coffees and poring over the ever-changing tax laws. Here, I've authored 100+ blogs on income tax and simplified complex income tax topics like the intimidating crypto tax rules, old vs new tax regime debate, changes in debt funds taxation, budget analysis and more. Some combinations I like- tax and content, finance & startups, technology & psychology, fitness & neuroscience. Read more

CONTENTS

Clear offers taxation & financial solutions to individuals, businesses, organizations & chartered accountants in India. Clear serves 1.5+ Million happy customers, 20000+ CAs & tax experts & 10000+ businesses across India.

Efiling Income Tax Returns(ITR) is made easy with Clear platform. Just upload your form 16, claim your deductions and get your acknowledgment number online. You can efile income tax return on your income from salary, house property, capital gains, business & profession and income from other sources. Further you can also file TDS returns, generate Form-16, use our Tax Calculator software, claim HRA, check refund status and generate rent receipts for Income Tax Filing.

CAs, experts and businesses can get GST ready with Clear GST software & certification course. Our GST Software helps CAs, tax experts & business to manage returns & invoices in an easy manner. Our Goods & Services Tax course includes tutorial videos, guides and expert assistance to help you in mastering Goods and Services Tax. Clear can also help you in getting your business registered for Goods & Services Tax Law.

Save taxes with Clear by investing in tax saving mutual funds (ELSS) online. Our experts suggest the best funds and you can get high returns by investing directly or through SIP. Download Black by ClearTax App to file returns from your mobile phone.

Cleartax is a product by Defmacro Software Pvt. Ltd.

Company PolicyTerms of use

ISO

ISO 27001

Data Center

SSL

SSL Certified Site

128-bit encryption