Section 80GGC of the Income Tax Act

Section 80GGC is a part of Chapter VI-A of the Income Tax Act, 1961 which include deduction towards donations made to Political Party or Electoral Trust.

This section was added in the Finance Act 2009, with the objective of introducing transparency into electoral funding.

Important Update on Donation Deductions

The Income Tax Department has issued comprehensive questionnaires to taxpayers those who claimed deduction under Section 80GGC in ITRs.

Taxpayers who claimed this deduction are receiving message to verify their claims and take necessary actions.

Message over 80GGC Deduction -

Who are Eligible to Claim 80GGC Deduction?

Individuals, HUF, Associations of Persons, Body of Individuals, Firms, Artificial judicial person not funded by the government - who donate to a registered political party or electoral trust.

Who Cannot Claim Deduction u/s 80GGC?

• Companies
• Local authorities
• Artificial juridical persons funded by the government.

Note:

Deduction are not applicable on TDS on an individual's salary. Only employees who draw a salary with no other income from business can avail deductions u/s 80GGC while filing tax return.

How To Claim the Deduction Under Section 80GGC?

To claim deduction under section 80GGC, taxpayers must file their ITR only in old tax regime as it is not allowed under the new tax regime.

Donation Contribution

Contribution to political parties must be made through modes of payments such as cheque, demand draft or electronic transfer.

No deduction shall be allowed in respect of any sum contributed in cash.

Maximum Limit

There is no maximum limit applicable on the contributions made to the political parties u/s 80GCC of the Income Tax Act.

Note:

The political party who are receiving the donation must be duly registered u/s 29A of the Representation of People Act 1951.

The electoral trust receiving the donation amount must be duly registered and recognized by the competent authorities.

Deduction Limit

100% of the amount contributed can be claimed as deduction under section 80GGC.

Documents Required

To qualify for tax deduction you must have the following documents:

• Donation receipts for proof.

• The receipt must include details such as PAN, TAN, the political party's address, fund registration number, payment method and donor's name.

• Completion and timely submission of the ITR form.

Responding to Notice on 80GGC Deduction Claim

Many taxpayers receive Income Tax notices & summons u/s 131(1A) for donations made to political parties or electoral trusts u/s 80GGC.

In this situation, taxpayers must furnish the following details for Verification:

• Details of the political party/ electoral trust to whom the donation was made.

• PAN of the political party/ electoral trust.

• How did you come in contact with the political party/ electoral trust?

• Name of the contact person in the political party/ electoral trust.

• What due diligence did you carry out before making donations to the Political Party?

• Whether the political party fights elections from the constituency in which you reside? If yes, kindly provide details regarding the same.

• Mode of payment for the donation to the political party/ electoral trust. Kindly provide documentary proof for the same.

• The receipt for the donation.

• Is the political party registered under Section 29A of the Representation of the People Act, 1951, or an electoral trust approved by the CBDT? If yes, provide the registration details or proof of registration of the political party/ electoral trust.

The IT Department scrutinizes such donations to prevent misuse and ensure genuine transactions and demand detailed documentary proof to verify claims.

FAQs