Important Keyword: 80GGC, Chapter VI-A, Income Tax, Tax Benefits.

Section 80GGC: Deduction on Donation to Political Parties

Political donations enable individuals to show their support for a particular party or candidate. These contributions are crucial for funding the operations of political parties. The government recognizes this and provides tax deductions on such donations. Under Section 80GGC of the Income Tax Act, taxpayers can receive tax benefits for their contributions to political parties. Therefore, if you meet the eligibility criteria, you can claim an 80GGC deduction when filing your Income Tax Return (ITR).

Eligibility Criteria for Claiming 80GGC Deduction

Individuals, Hindu Undivided Families (HUF), firms, Associations of Persons (AOP) not funded by the government, Bodies of Individuals (BOI), and artificial juridical persons not funded by the government can claim a deduction under Section 80GGC. However, companies, local authorities, and artificial juridical persons receiving government funding are not eligible for this deduction.

Eligible Entities for the Deduction

To claim the deduction under Section 80GGC, taxpayers must donate to:

• A registered political party under Section 29A of the Representation of the People Act, 1951.
• An electoral trust.

Section 80GGC Deduction Limits

Taxpayers can claim 100% of their contributions made through legitimate banking channels, such as internet banking, credit/debit cards, and other online payment methods, as a deduction under this section. This deduction falls under Chapter VI A, meaning the total tax deduction cannot exceed the individual’s total assessable income.

Exceptions to 80GGC Deduction

Donations in cash are not eligible under this section. Only contributions made through non-cash modes are eligible. Donations in the form of gifts or kind cannot be claimed as deductions under this section.

How to Claim the Deduction?

Eligible persons can claim an 80GGC deduction while filing their Income Tax Return (ITR), provided all conditions are met. This deduction can be claimed in ITR forms 1, 2, 3, and 4, depending on the income sources.

When filing an ITR, the taxpayer must provide:

• Date of the contribution
• Amounts (both in cash and through other modes)
• Eligible amount of contribution
• Transaction reference number for UPI transfer or cheque number/IMPS/NEFT/RTGS
• IFS code of the bank

Supporting Documents Required

As proof of the donation, the political party will issue a receipt containing the name and address of the party, the amount donated, the PAN of the party, the mode of payment, and the donor’s name. These details must be submitted to the employer for inclusion in Form 16 or mentioned in the designated column when submitting tax returns.

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Official Income Tax Return filing website: https://incometaxindia.gov.in/