Learn About Section 80GGC of Income Tax Act: Support Your Political Preferences and Save on Taxes

Last Updated : Aug. 7, 2023, 12:02 p.m.

Do you want to support the country’s taxation, political and legal system and, at the same time, save tax? If yes, you should know about Section 80GGC of the Income Tax Act. Under this section, you can claim a tax deduction for any donation to political party or an electoral trust. This way, you express your political preferences and reduce your tax liability. However, there are some conditions and limitations that you need to follow to avail the benefits of this section. This guide will help you understand the 80GGC deduction and how to claim it.

What is Section 80GGC of the Income Tax Act?

Section 80GGC of the Income Tax Act is a provision allowing taxpayers to claim a tax deduction if they make any donation to political party or an electoral trust. Introducing the 80GGC deduction encourages taxpayers to participate in the country’s political system and express their political inclinations. This section also facilitates transparent and accountable electoral funding.

The 80GGC deduction is a beneficial provision for taxpayers who want to express their political support by any donation to political party. However, the 80GGC deduction is only available to individual taxpayers instead of companies, local authorities, or artificial judiciary individuals wholly or partly funded by the government.

Difference between Sections 80GGC and 80GGB of the Income Tax Act

Both Section 80GGC and Section 80GGB allow their eligible donors to make any donation to political party under the same conditions. But the difference lies in the type of donors they allow.

• Any person can avail of the benefits of the 80GGC deduction except for companies, local authorities, or artificial judiciary individuals wholly or partly funded by the government.
• On the other hand, under Section 80GGB, only an Indian company can avail of the deduction benefits.

Benefits of Section 80GGC of the Income Tax Act for Taxpayers

Section 80GGC of the Income Tax Act allows taxpayers to reduce their tax liabilities by making a donation to political party. The benefits for the taxpayers under this section are as follows:

• It encourages taxpayers to participate in the country’s political system actively. It helps facilitate transparency and accountability in electoral funding.
• The 80GGC deduction reduces a taxpayer’s taxable income by the amount of donation to political party. It means that they can save some money and lower their tax.
• Section 80GGC specifies no upper limit. It means that the taxpayer can claim 100% of the amount made as a donation to political party or electoral fund as a tax deduction.
• Since the taxpayer must donate or contribute through banking means like cheques, online banking, credit card, or debit card, the process is much more transparent and straightforward.

Eligibility Criteria for Section 80GGC of the Income Tax Act

The eligibility criteria for Section 80GGC of the Income Tax Act are as follows:

• The donor can be any person except companies, local authorities, and artificial juridical persons wholly or partly funded by the Government.
• The donor must donate or contribute through a banking channel, such as a cheque, online banking, debit card, and credit card. No deduction is allowed for donations or contributions made in cash or kind.

Documents Required to Apply for Section 80GGC of the Income Tax Act

To claim an 80GGC deduction under this section, the taxpayer must submit the following documents:

• A receipt or certificate from the political party or electoral trust to which the taxpayer donates or contributes. The receipt or certificate must contain the following details:
  • Name, address, PAN, TAN, and registration number of the party or trust
  • Name, address, and PAN of the donor
  • Mode, amount, and date of payment.
• A statement stating that the taxpayer does not own any additional real estate, including the home of his spouse, minor child, or HUF to which he belongs.
• The taxpayer must submit a copy of Form 10BA, which declares that the taxpayer has no other residential accommodations.

Procedure to Apply for Tax Deduction under Section 80GGC

To apply for the 80GGC deduction under this section, follow the given steps:

• Make a donation to political party of your preference through a banking channel, such as a cheque, online banking, credit card, debit card, or other means. You cannot claim a deduction for a donation made in cash.
• You will get a receipt or certificate from the political party. The receipt must contain the following details: name, address, PAN, TAN, and registration number of the party or trust; name, address, and PAN of the donor; mode, amount, and payment date.
• File the income tax return by including the amount of donation or contribution under Section 80GGC in the space provided on the income tax form. The section appears under Chapter VI-A deductions in the ITR form.
• Submit the receipt or certificate alongside the income tax return as proof of donation or contribution.

Drawbacks of Section 80GGC of the Income Tax Act

While the 80GGC deduction under this section benefits the taxpayers, it also has some limitations that taxpayers must familiarise themselves with.

• For a taxpayer to benefit from the 80GGC deduction, the donation to political party must be through online banking, debit cards, credit cards, and other means. Donations made in cash are not eligible for tax deduction under this section.
• Section 29A of the Representation of the People Act of 1951 must have the political party or electoral fund to which the taxpayer donates registered. Donations to any unregistered political party or entity will not qualify for the 80GGC deduction.
• The deduction cannot exceed the taxpayer’s total income.
• The taxpayer must submit the receipt or certificate from the political party or electoral trust with the income tax return as proof of donation to political party .

Conclusion

Section 80GGC of the Income Tax Act is a beneficial provision for taxpayers to express their support for the country’s political system. By making a donation to political party, taxpayers can claim an 80GGC deduction up to 100% of the donated amount. We hope that this guide was able to help you understand the benefits and limitations of this section and how to apply for its benefits.

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