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Section 80GGC - Deduction on Donations to Political Party

Under Section 80GGC of the Indian Income Tax Act, any contribution to a political party or electoral trust is eligible for a tax deduction. The whole amount you pay as a contribution can be claimed by you as a deduction provided it does not exceed your taxable income.

There are many sections under the Income Tax under which you can obtain deductions from your total taxable income. Some of the popular sections include Section 80C, 80D, etc. Another important section that many people do not know about is Section 80GGC.

This section states that any donation to a political party or electoral trust 80GGC is eligible for a tax* deduction. The whole amount that you donate will be eligible for a tax deduction.

The 80GGC limit is placed on the amount of taxable income that you have. It means the tax deduction under 80GGC cannot be more than your taxable income. Thus, it is one of the sections that allow you to get a tax deduction up to your taxable income amount.
 

Read on to find more details about Section 80GGC.

Section 80GGC Explained

India has many different political parties, and almost all of these parties rely on donations from their supporters to fund their campaigns. The Indian Income Tax Act has, therefore, dedicated a section that allows people to make donations to their preferred political party. Under Section 80GGC of the Act, you can donate money to a certain political party and claim a deduction on the amount you have donated. 

Eligibility Criteria Under Section 80GGC

As stated above, any individual taxpayer can claim deductions up to a certain limit for donations to a political party (80GGC). Under the Income Tax Act, it is the political party donation tax exemption. If you wish to claim the amount that you have donated as an 80GGC deduction, the contribution must be made by demand draft, cheque, online banking, debit card, credit card, or wire transfer. If you donate using cash, you will not be able to seek any 80GGC deduction.

Note that a political party is termed an individual Indian citizen’s body or an association that is registered with the Indian Election Commission and is deemed an election body.
 

An electoral trust is a Section 8 firm or a non-profit entity created in the country to get voluntary contributions from an individual and distribute these contributions to political parties. The main role of any electoral trust is to obtain contributions and then distribute these to respective political parties.

Section 80GGC - Details

You can contribute to the growth of the nation by providing monetary support to the political party that you prefer. The limit of donation under section 80GGC has been fixed at 10% of your gross income in a year.

The best thing about this section is that you can claim an amount ranging from 50% to 100% on the donation that you have made to the political party. For example, in case you have donated ₹2 lakhs to your favourite party, you can get a deduction of ₹2 lakhs from your taxable income.

The taxable income reduces with every contribution that you make to any party of your choice. But remember that you will not be able to claim any deductions for cash donations.

To get a deduction under the Section 80GGC, you need to provide proofs that can be verified. If you do not have 8GGC proofs, you will not be able to claim any deductions.

Moreover, you must make donations to individuals and parties that are legitimate if you wish to receive a deduction. The 80GGC deduction limit is fixed, and it cannot be more than your annual taxable income.

80GGC Claim - Exceptions

There are some exceptions that are applicable for deductions under this Section to ensure that the conduct of political parties and individuals is fair. These include:
 

  • Cash Donations

    If you make your donations via cash, you will not be able to claim any deductions. It is because a person might not have made any donations, yet he might claim a deduction. Hence, the exception helps make the laws stringent and avoids exploitation.

  • Donations Made Using Other Ways

    In some cases, a person might provide some services to any party due to kindness or as a favour. In this case, the person might think of it as a donation, but the IT Act does not consider it as one. Hence, if you contribute in the form of a favour or in some other way, there is no monetary deduction that you are eligible for.

Conclusion

Thus, under 80GGC, you can claim a deduction if you make a contribution to your favourite party. You must understand that there are certain rules in place while you make a donation for you to be able to receive a donation. Make sure that you follow all the rules so that you can claim an 80GGC deduction on the amount that you have contributed.

There are other sections, such as Section 80C, under which you can claim a deduction up to a certain limit. Ensure that you are aware of all the tax deductions that you can avail of legally to reduce your taxable income.

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

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Frequently Asked Questions

Where can I claim a deduction under Section 80GGC?

You can claim a tax deduction under Section 80GGC when you file your Income Tax Returns.

Can I claim a deduction under Section 80GGC without any proof?

No, you cannot claim a deduction without any proof. You need to have a receipt as proof of your contribution. The details on the receipt must include your name, PAN card number, address of the party, registration number mentioned in the fund, name of the donor, and payment method.

Who is not eligible for making a claim under Section 80GGC?

Any individual who makes the donation in cash or through other means, like gifts that are not monetary in nature, is not eligible to claim any deductions.

What is the difference between Section 80GGC and 80GGB?

Under Section 80GGC, individuals can claim a tax deduction on the amount that they have contributed to a political party or any electoral trust, whereas under Section 80GGB, Indian companies can claim a tax deduction on the amount that they have contributed to a political party or any electoral trust.

Disclaimers

  • Insurance cover is available under the product.
  • The products are underwritten by Tata AIA Life Insurance Company Ltd.
  • The plans are not guaranteed issuance plans, and they will be subject to Company’s underwriting and acceptance.
  • For more details on risk factors, terms and conditions, please read the sales brochure carefully before concluding a sale.
  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.
  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.
  • Tax:*Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you.