Deductions under Section 80GGC of the Income Tax Act, 1961

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Deduction under Section 80GGC of the Income Tax Act 1961

Section 80GGC was introduced mainly with an objective of achieving transparency into the electoral funding system and also reducing corruption to some extent. It provides a tax deduction for donations/contributions made to a political party or an electoral trust.

Eligibility Criteria under Section 80GGC

Under section 80GGC, only individual citizens are permitted to claim tax reductions.

  • Individuals making the payment through cheque, demand draft, or any other digital mode except cash mode can claim the tax benefits.
  • Donations must be made to an enrolled political party under area 29A of the Representation of People Act (RPA), 1951.
  • Donations made to electoral trust additionally will be qualified for asserting expense derivation under segment 80GGC.

Note: Individuals can claim a 100% tax deduction on the amount contributed towards a registered political party or an electoral trust.

Categories for persons qualify for claiming deduction under Section 80GGC

  • The deduction can be claimed by an assessee, being an individual.
  • Local Authorities and every artificial juridical individual which is either completely or mostly financed by the Government cannot claim a tax deduction.
  • Companies also cannot claim the tax deduction under Section 80GGC.

Difference between Section 80GGC and Section 80GGB

Both Section 80GGB and Section 80GGC provides tax deductions benefits on the donations made towards political parties or an electoral trust. However, under Section 80GGB, organizations can also claim tax benefits whereas Section 80GGC does not allow the companies to claim tax benefits.

It is beneficial to note here that deduction under segment 80GGC is covered under Chapter VI A of deduction, which means subsequently that the aggregate sum of deduction permitted to an assessee can’t surpass the taxable salary of an assessee.

It ought to be noted here that the political party referred above covers the political parties which are enrolled under area 29A of the Representation of the People Act, 1951. Any donation/ contribution to some other political party would not qualify as a deduction under area 80GGC.

For more information, visit the website All India ITR

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