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What is Section 80GGC?

Section 80GGC is a section of the Income Tax Act, 1961 that has provisions for tax deductions of donations or contributions made by an individual taxpayer towards electoral trusts or political parties. It should be noted that, however, the tax deduction amount cannot be more than the total income of an individual.

The tax deduction under Section 80GGC of the Income Tax Act was introduced by the Income Tax Department with the aim of bringing transparency into the electoral funding for electoral trust and political parties. One of the main objectives of the 80GGC deduction is to reduce corruption in the electoral funding system. The political party referred to under this section must be registered under Section 29A of the Representation of the People Act, 1951.

Investments That Come Under Section 80GGC

Section 80GGC of the Income Tax Act covers the following list of investments/ donations that can be claimed for income tax deductions. You can claim these deductions when filing for your income tax returns.

 

  1. Donations made to a political party registered under Section 29A of the Representation of the People Act, 1951

  2. Donations made to an electoral trust

 

It should be noted that any donations or contributions made towards a political party not registered under the Representation of the People Act will not qualify for 80GGC deduction under the Income Tax Act.

Eligibility Criteria for Section 80GGC

The following is the eligibility criteria for Section 80GGC:

 

  1. The tax deduction under Section 80GGC can be claimed by an individual taxpayer.

  2. The deduction cannot be claimed by any local authorities or an artificial person funded in part or fully by the government.

  3. The 80GGC deduction cannot be claimed by corporations or companies.

Section 80GGC Deductions and Limits

Section 80GGC of the Income Tax Act, 1961 also comes with certain limits. Here’s a list of the same:

 

  1. The full amount or 100% of the contribution made by an individual taxpayer to a registered political party or electoral trust can be claimed as a tax deduction under Section 80GGC of the Income Tax Act. However, the deduction cannot exceed the total income of the individual making the donation.

  2. Any donations or contributions made through cash are not eligible for tax deductions under Section 80GGC.

  3. Only donations made through genuine banking channels such as through cheque, online transfer, debit or credit card, among others, will be eligible for tax deductions.   

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FAQs

✔️Can any of the government institutions make donations to any political party?

No, a government institution can neither make donations or claim tax deductions for donations made to any political party.

✔️Can I save more than ₹25,000 on tax deductions if I make donations to a political party?

Yes, since any donated amount is considered for total tax deductions, donations of more than ₹25,000 will also be considered for deductions.

✔️What if Section 80GGC is insufficient to lower my income tax liability?

To avail further deductions and minimize tax liability, you can invest in any one of the many investment options mentioned in various sections of the Income Tax Act. For instance, by opting for term insurance, you can avail of deductions under Section 80C, for the premiums paid towards your policy. You can purchase a term insurance plan on Finserv MARKETS and make the most of your policy by availing tax benefits. In addition to these tax benefits, you would also be able to procure benefits like high sum assured of up to Rs. 1 crore at premiums of just Rs. 13 per day, critical illness riders that cover up to 55 critical illnesses and swift claim settlement processes.