Section 80GGC allows any Individual to donate to political Party or Electoral Trust in India to save income tax. This is allowed to encourage more donations to be done to political parties in India for Development purpose. It is available for Individuals who’s contributions or donations to political political party or electoral trust can help them save income tax. There is no maximum limit under 80GGC and 100% of the donated amount can be claimed in this section, Companies can use Section 80GGB to claim deductions for their donations.
Let us understand more about Section 80GGC in detail.
- What is Section 80GGC of Income Tax Act
- Section 80GGC Conditions and Eligibility
- Deduction Limit under Section 80GGC
- Section 80GGC Exceptions
- Difference between Section 80GGB and 80GGC
- How to claim Section 80GGC
- Frequently Asked Questions
What is Section 80GGC of Income Tax Act
- Section 80GGC of income tax act allows an Individual tax payer to claim deduction against donation paid to political party or electoral trust in India
- This donation can help the Individuals to save income tax
- For Indian Companies, the donations and contributions to political parties or electoral trust can be claimed under Section 80GGB to save income tax
- Note that there is no maximum limit to be claimed under 80GGC and 100% of the amount donated can be claimed as deduction from gross income
- However you can only donate maximum of what you earn in a financial year, that is your gross total income. So your donations that can be claimed cannot be more than your gross total income
- The political party receiving the donation must be a registered political party under the Section 29A of the Representation of the People Act
- An electoral trust is a non-profit company
- Electoral trust can receive contributions from companies and then reallocate it to the registered political parties
- Individuals can make donations to other organizations under Section 80G to claim deductions with old tax regime as well
ALSO READ: Old vs New Tax Regime Which is Better?
Section 80GGC Conditions and Eligibility
There are certain conditions based on which you can claim Section 80GGC deduction:
- You must be an individual or HUF (Hindu Undivided family) member who is a tax payer to claim donations under 80GGC
- The donations made must be in demand draft, cheque or online transfer. Cash transactions are not allowed to be claimed under 80GGC deduction
- Companies or local authorities cannot claim 80GGC deduction. They can claim donations under Section 80GGB
- Contributions must be made to political parties that are recognized according to Section 29A of the Representation of the People Act (RPA), 1951
- Contributions can also be made to electoral trust which can than allocate the funds to political parties
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Deduction Limit under Section 80GGC
There is no maximum deduction limit that can be claimed under 88GGC. You can claim 100% of the amount donated to political party or electoral trust you have donated to.
However, you can only donate the amount that is up to your gross total income in financial year, not more than that to claim as deduction.
Section 80GGC Exceptions
There are certain exceptions where 80GGC is not allowed:
- Cash transactions as donations are not allowed since digital proof is required to claim this deduction
- Donations in the form of gift not having the accurate monetary value is not allowed under 80GGC
- Only donations made via cheque, demand draft or online net banking transfer to political party or electoral trust is allowed to be claimed with 80GGC
Difference between Section 80GGB and 80GGC
Section 80GGC is for the individuals or members of HUF where they can donate to political party or electoral trust to save income tax by reducing their taxable income.
Whereas Section 80GGB is for the companies to donate to similar political parties to save their income tax. So if you have a company then you should be using Section 80GGB or if you want to claim deduction of donations made to political party as an individual, you should use Section 80GGC.
How to claim Section 80GGC
Once you donate to political party that is registered under section 29A of the Representation of the People Act, 1951, you can take the receipt and submit it to your employer to update your Form 16 to be submitted while filing ITR (Income Tax Return).
If you are self employed, ensure that you provide the political party name, amount of donation and receipt of donation made while filing ITR and providing such details in relevant section belonging to 80GGC in ITR.
So Section 80GGC of income tax act allows the individual tax payer or HUF (Hindu Undivided Family) to donate to political party or electoral trust and claim deduction for same in order to save income tax.
It is important to note that such donations are eligible for tax exemptions only in old tax regime, without any maximum limit. New Tax regime does not allow Section 80GGC to be claimed.
Some more Reading:
- New Tax Regime Slabs and Deductions allowed
- Section 80CCC Tax Deduction to claim Insurance Premiums
- Section 80DD Tax Deduction for Differently Abled Person
Frequently Asked Questions
Who is eligible for 80GGC?
Any individual tax payer or HUF (Hindu Undivided Family) member who donates to political party or electoral trust via non cash mode of transaction is eligible to claim 80GGC Deduction
What is the limit of 80GGC tax exemption for Political Donations?
There is no maximum limit of 80GGC tax exemption. You can claim 100% of the amount donated to political party to save income tax. However, the total donation made must be less than your gross income for that financial year.
Is proof required for 80GGC?
Yes, the donation made via online mode or via cheque or demand draft can be claimed under 80GGC, with a receipt from political party stating that amount is received as donation from you. This receipt can than be submitted while filing ITR to claim deduction with 80GGC.
Can we claim 80GGC with new tax regime?
No, Section 80GGC is only allowed in old tax regime, since new tax regime have reduced tax slab rates with minimum deductions that can be claimed.
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