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Section 80GGB & 80GGC: Deduction in respect of contribution to political parties

CA Alexandar Gazi , Last updated: 18 March 2023  
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Section 80GGB: Deduction in respect of Contributions given by Indian Companies

Quantum of deduction: Entire amount of contribution to any political party or electoral trust is eligible for deduction under this section.

Notes:

  1. Contribution by way of cash is not eligible for deduction under this section.
  2. Indian company has been defined u/s 2(26) of the Income Tax Act, 1961. Shortly it means a company incorporated under the Companies Act, 2013 or under any previous company law.
  3. Contribution shall have the meaning as has been assigned to it u/s 182 of the Companies Act, 2013.
Section 80GGB and 80GGC: Deduction in respect of contribution to political parties

Section 182 of the Companies Act, 2013 (an excerpt)

  • A Government company can’t directly or indirectly contribute any amount to any political party or electoral trust.
  • Other companies which are in existence for not less than three financial years may directly or indirectly contribute certain amount to any political party or electoral trust. Maximum contribution in any financial year shall not exceed 7.5% of the average net profits during the three immediately preceding financial years.
  • A resolution shall be passed in a meeting of Board of Directors authorizing the making of such contribution.
  • An expenditure, directly or indirectly, by a company on an advertisement in any publication, where such publication by or on behalf of a political  party, shall be deemed as  contribution of such amount to such political party.
  • An expenditure, directly or indirectly, by a company on an advertisement in any publication, where such  publication  not by or on behalf but for the advantage of a political party, shall be deemed as contribution for political purpose.
  • Any payment made by a company to any person who is carrying on any activity which can reasonably be regarded as likely to affect public support of a political party shall  be deemed to be contribution for political purpose.
 

Section 80GGC: Deduction in respect of Contributions given by any person to political parties

Quantum of deduction: Entire amount of contribution to any political party or electoral trust is eligible for deduction under this section.

 

Notes:

  1. Contribution by way of cash is not eligible for deduction under this section.
  2. Local authority and every artificial juridical person wholly or partly funded by the Government can’t directly or indirectly contribute any amount to any political party or electoral trust.

Published by

CA Alexandar Gazi
(PRACTICING CHARTERED ACCOUNTANT)
Category Income Tax   Report

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