What is Section 80GGC?
Individuals making donations to any political parties can avail of tax deductions under Section 80GGC of the Income Tax Act, 1961. However, there are certain terms and conditions that must be followed to avail of the said benefits. Before applying for the tax deduction, one must make sure that they comply with the eligibility criteria and the limit of deductions.
To give a rundown of Section GGC, it specifies that an assessee can claim deductions on contributions made to a political party or electoral trust. The entire amount is likely to be included for the tax deduction, as long as it is donated not in cash, but by other means.
Deduction under Section 80GGC - Terms & Condition
The main highlights of Section 80GGC are as follows:
The deduction falls under Chapter VI-A of the Income Tax Act, 1961, which stipulates that the total amount of tax deductions cannot be more than the complete assessable income of the person
The deductions must be made only by individuals and not by corporations or institutions
Section 80GGC does not specify any monetary tax deduction limit. Hence, the complete amount that has been contributed to an electoral trust or political party can be claimed for tax deductions
The money spent on printing brochures, advertisements, and pamphlets will not be eligible for tax deductions
Eligibility for Claiming Deductions under 80GGC
Taxpayers who wish to claim Section 80GGC deductions must comply with the following eligibility criteria:
Specifically, a political contribution can be made by- an individual, a firm, a Hindu Undivided Family (HUF), an Association of Persons(AOP) can be claimed as deductions under this section
Government-funded individuals, either wholly or partly, like judicial authorities or local authorities cannot claim tax deductions under this section
A Body of Individuals (BOI) and an Artificial Juridical Person (AJP) can also avail of deductions on contributions, provided that they are not funded by the government
Donations to multiple political parties are also eligible to receive deductions
To avail of the benefits, it must be ensured that the mode of donation must not be in cash
Political party to whom the donation will be made should be registered under the Representation of People Act (Section 29A)
Claiming 80GGC Deductions
Availing of the said tax deductions under this section is particularly easy and convenient. Let’s have a look at how you can claim the tax deductions under this section.
Procure the specified ITR (Income Tax Returns) Form
Under Chapter VI-A of Section 80GGC, fill in the amount of contribution made by you to the political party of your choice
When you make the donations in question, the political party will provide a receipt for the same that contains the name, address, donation amount, TAN (Tax Deduction and Collection Account Number) and PAN of the party. Keep this handy and submit these details as proof of your donation.
Exceptions under Section 80GGC
Under Section 80GGC, there are certain exceptions under which tax deductions will not be applicable. They are:
The money donated via cash will not be considered as donations. However, donations by net banking, credit card, or debit card can be considered as eligible donations and thus can be claimed while filing the Income Tax returns
Any contributions or donations made in the form of favors or gifts will not be considered as donations
Key points Related to Section 80GGC
There are some chief points you must consider while claiming tax deductions under 80GGC.
The goal of the Section was, for the most part, to allow transparency in political funding and thus, try to make it free from corruption. It further empowers individual and voluntary contributions towards electoral parties
People claiming deductions under 80GGC of Income Tax, have the benefit of saving the considerate portion of tax simultaneously with other deductions and exemptions on medical allowance, house rent allowance, among others
Conclusion
Section 80GGC allows individuals to avail of deductions for contributions to the electoral trust or political parties. Make the most of your contribution by applying for the applicable deductions under Section 80GGC.
FAQs
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✔️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?
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