Deduction Under Section 80GGC of Income Tax Act: Check Eligibility Criteria

Section 80GGC was introduced under the IT Act, 1961 to eliminate or at least significantly reduce this problem and make electoral funding more transparent. If you’ve donated money to any political party or electoral trust, you are allowed to claim deductions on the same under this section.Here are 3 things you should know about Section 80GGC-

As mentioned above, Section 80GGC allows an individual taxpayer to claim a 100% tax deduction on the amount he/she contributes or donates to any political party or an electoral trust. However, the contribution should only be in demand draft, cheque, or any digital mode to take advantage of this deduction. Cash payments are not eligible for deduction.Also, as per Chapter VIA of the IT Act, the total amount claimed under Section 80GGC cannot be higher than the total taxable income of the individual

Yes, there is no limit on the number of political parties an individual can contribute to. All the contributions made to multiple political parties are eligible for this deduction as long as they meet the eligibility criteria.But note that contributions to local authorities or artificial juridical individuals who are mostly or entirely funded by the government are now allowed to claim this tax deduction.

Both the sections, 80GGC and 80GGB, cover deductions on contributions or donations made to political parties or electoral trusts. Any Indian business or corporation may donate money to a political party or parties, or to an electoral trust and claim a tax deduction in accordance with Section 80GGB of the Income Tax Act of 1961.
Any recorded method other than cash may be used to make donations to a party that has registered under Section 29A of the People Act, 1951.A contribution under this section is defined as costs associated with an advertisement, TV ads, radio tunes, as well as social media.
The amount will be exempt from tax if a company promotes a political party in its magazine.
The corporation must have documentation of all contributions made to political parties.However, Section 80GGB is for organizations that want to claim tax deductions on their donations. Section 80GGC, on the other hand, is only for individual taxpayers.

Select the right ITR form while filing taxes and mention the donated amount. The political party also provides a donation receipt when you make the payment. You’ll be required to enter details from this receipt to file ITR and claim the deductions successfully.

A tax deduction is allowed under Section 80GGC for any money given to a political party or an electoral trust by an individual during the preceding year. If the donor gives a cash donation, there is no deduction allowed.Any sum contributed to a political party or an electoral trust during the fiscal year may be deducted from the assessee's total income. Local governments and artificial juridical entities that get full or partial funding from the government are not eligible.

Individuals may deduct up to 100% of their contributions to a political party or electoral trust from their taxes. As a result, the contribution paid to the relevant party is proportionately deducted from the person's overall taxable income . In other words, the entire amount of a taxpayer's or assessee's donation to an authorised political party will be subtracted from that person's taxable income.

The following are Section 80GGC exceptions:Tax deductions are not available for gifts or contributions that are made in kind or cash. Beginning with the 2013–2014 fiscal year, this sectional amendment came into force.
Neither money nor in-kind donations should be given to the political party. For donations made through the bank, one may also utilise a check, DD, wire transfer, debit card, credit card, or internet banking.
If the total contribution does not exceed the eligible assessee's taxable income, the entire amount is eligible for a tax deduction.The actions taken by Sections 80GGB and 80GGC to enforce the tax deduction benefits are fairly similar. The main distinction lies in recognising the various donor types:
Companies may claim tax benefits under Section 80GGB, but only individual taxpayers may do so under Section 80GGC.

Taxpayers who wish to take advantage of this provision's deductions may indicate the amount of their donation on the applicable income-tax return form. These details must be included in the section designated for Section 80GGC. The section is located in the Income Tax Return Form's "Chapter VI-A Deductions" section. To qualify for deductions, taxpayers must make sure that donations are sent to political parties using authorised financial channels, like internet banking, checks, debit cards, credit cards, bank drafts, or other appropriate methods.Ready to make the most of your money? Start your tax planning journey now!

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.