CA Alexandar Gazi
Quick Summary
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:
- Contribution by way of cash is not eligible for deduction under this section.
- 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.
- Contribution shall have the meaning as has been assigned to it u/s 182 of the Companies Act, 2013.
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:
- Contribution by way of cash is not eligible for deduction under this section.
- 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.
FAQ :
Section 80GGB provides a tax deduction for Indian companies that contribute to political parties or electoral trusts. The entire amount of the contribution is eligible for deduction, as long as it's not made in cash.
Section 80GGC allows any person, other than a local authority or artificial juridical person partly funded by the government, to claim a tax deduction for contributions made to political parties or electoral trusts. The full contribution amount is deductible if not made in cash.
No, contributions made by way of cash are not eligible for deduction under either Section 80GGB or Section 80GGC.
Yes, for companies other than government companies, contributions cannot exceed 7.5% of the average net profits during the three preceding financial years. A Board of Directors resolution is also required.
Government companies cannot contribute under Section 80GGB. Under Section 80GGC, local authorities and artificial juridical persons wholly or partly funded by the Government are restricted from contributing.
CAclubindia
