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Section 80GGC - Avail Benefits on Donation to Political Parties

Updated on May 25, 2024 , 10686 views

India is a Land of diversity. The very fabric of the country is based in many cultures, languages and traditions. India is also considered as the biggest democracy in the world. One of the main contributors to this is political parties.

Section 80GGC

People support political parties for various reasons including tax Deduction. Yes, you heard that right! You can claim a tax deduction for your financial support toward a political party.

Deductions related to this were introduced through Section 80GGC of the income tax Act, 1961. The section was introduced through Finance Act 2009.

What is Section 80GGC?

Section 80GGC deals with the benefit to those making donations to a political party. However, all donations to a political party are not eligible for benefit under this section.

The donations made u/s 80GGC are 100% tax-Deductible and there is no specific limit mentioned under the section. Any amount contributed to the electoral trust registered political party (u/s 29A of the RPA, 1951) can be claimed for a tax deduction.

Features of Section 80GGC

The features of this section are mentioned below:

1. Transparency

The section was introduced to allow transparency in electoral funding. It also encourages contributions to political parties from taxpayers.

2. Deduction

The deduction comes under the Chapter VI-A that implies total amount which can stand and that deduction cannot be more than the taxable Income. The tax deduction is made toward specified assesses.

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Eligibility Criteria Under Section 80GGC

1. Funding

Under this section, funding individuals, hindu undivided family (HUF), company, AOP or BOI and an Artificial Juridical Person can make a political contribution. Local authorities or artificial juridical persons wholly or partly funded by the government cannot make a contribution.

2. Benefits

You can enjoy the benefits of making donations to multiple political parties.

3. Donation Type

The donation you are making to a political party should never be in cash. Only then will you be eligible under this scheme. This amendment was established in 2013-14. You can make the transfer through cheque, Demand Draft, debit or credit card, internet banking, etc.

Procedure for Deduction Under Section 80GGC

The procedure to obtain this deduction under Section 80GGC is easy. You have to file the Tax Return by including the amount you have provided as a contribution under Section 80GGC in the space provided for the same on the Income Tax Form.

The Section appears under Chapter VI-A of the Income Tax Return Form. You can avail this deduction limit by contributing through online banking, cheques, debit cards, credit cards, demand drafts etc.

Donation details should be submitted to your employer with Form 16. Enter all the required details in the column mentioned for the same while submitting tax returns. The political party receiving the donation should issue a Receipt with the following details:

  • Name of the Political Party
  • Amount received as Donation
  • PAN
  • TAN

The donation to political party 80GGC will be deducted from your salary and you can claim this deduction if you have a certificate from the employer. This will be proof that the contribution was made from the employee’s salary account.

Difference Between Section 80GGC and Section 80GGB

Both sections are quite similar. However, there is a point of difference that differentiates them.

This difference is mentioned below:

Section 80GGC Section 80GGB
Specified taxpayer can claim the benefit Companies are eligible to claim benefits. According to Section 80GGB of the Income Tax Act 1961, an Indian company that contributes any sum to a political party or an electoral trust registered in India can claim for a deduction for the amount contributed by it

Documents Required Under Section 80GGC

In order to claim the deduction, you have to submit the following documents that will be in form of receipts:

  • Receipt from a Political party you have donated, which should have their name mentioned
  • Address of the political party
  • PAN and TAN registration number on the receipt
  • Donor name
  • Mode of payment
  • The amount in words and numbers

Conclusion

Make sure to have the receipt while filing for a deduction. Unavailability of the receipt will not allow you to claim the deduction. As an advice, donate through other means excluding cash.

Disclaimer:
All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.
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