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Meaning, eligibility criteria, tax benefits, exceptions, how to avail etc for FY 2021-22 (AY 2022-23) & FY 2020-21(AY 2021-22)
Introduction One supports a political party not only for expressing solidarity or sharing ideologies with the party but also for a tax deduction. Political contributions are made to cover the expenses made by the political party mainly for election campaigns. Indian companies and other persons are allowed to give donations but not in cash. This contribution is eligible for deduction while computing the total income of the company or individual. The proof of the expenditure should be maintained for the confirmation of such procedures. Individuals who opt for tax deductions by supporting political parties, therefore have the advantage of saving a good portion of the tax under Section 80GGC along with other exemptions / deductions like House Rent Allowance, Medical allowance and the like. This Section was introduced through the Finance Act in 2009.
Section 80GGC has been specified under the Income Tax Act of 1961 for the benefit of those who make donations to political parties. There are certain conditions and criteria which have to be followed by the individual for the said benefits. One must note the eligibility criteria and the deduction limit for availing the tax deduction.
To summarise the definition of the Section 80GGC, it specifies the deduction under the Income Tax Act which is allowed from the total gross income of specified assessees for the contributions made to a political party or an electoral trust. This entire amount is eligible for tax deduction provided that it is not deposited in cash, but rather by other means.
One can identify the main features of Section 80GGC as follows:The procedure to avail the said tax deduction under Section 80GGC is fairly easy and convenient. The taxpayer can file their tax returns by including the given amount of contribution in the space provided under Section 80GGC in the Income Tax Return form. The Section appears under Chapter VI-A of the Income Tax Return Form. The deduction can be availed by contributing in any cashless form including online banking, cheques, debit cards, credit cards, demand drafts etc.
The details of the donations are to be submitted to the employer for incorporating it in form 16. Otherwise, the details are to be mentioned in the specified column while submitting tax returns. The political party shall issue a receipt containing the name and address of the party, amount donated, along with the PAN and TAN of the party. This donation is deducted directly from the salary, and the donation receipt is in the name of the employer. The employee can claim a deduction if he has this certificate from the employer, which confirms that the contribution was made from the employee's salary account.
Section 80GGC and Section 80GGB are very similar in their actions enforcing tax deduction benefits. However, the basic difference is to distinguish the donor types.
SECTION 80GGC | SECTION 80GGB |
Only specified taxpayers can claim the benefits. | Companies are eligible to claim benefits. As per the Section 80GGB of the Income Tax Act 1961, any 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. |
Meanwhile, other Sections like the Section 80G allows for deductions made in the case of contributions to charitable organizations and their likes
As per the Section 80GGB of the Income Tax Act 1961, any Indian company that contributes any sum to a political party or an electoral trust registered in India can claim for a deduction from the amount contributed by it.
One must produce the following documents which are required to avail the tax deduction.
The decision to donate to a political party should be made with due research and analysis such that the money is used up honestly in the larger welfare. It is extremely important to have a detailed record to avail the tax deduction after contributing. All the regulations by the Income Tax Act should be duly followed to avail the tax deduction and benefits; otherwise, the request is liable to be rejected. These contributions are exempt from tax and make it much easier for the political parties.
One must produce the following documents which are required to avail the tax deduction.
Yes, can claim a deduction for the donation made to the political parties under section 80GGC of the Income Tax Act, 1961.
Yes. An indian company can make political contribution and can claim deduction under 80GGB.
There is a 100% deduction available for contribution u/s 80GGC, if contribution is made by any mode other than cash.
100% of the amount so contributed, provided same has been contributed by any mode other than cash.
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