Donations to political parties

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This query is : Resolved

Saurav Nayyar (Querist)

27 October 2014 What is the treatment of money donated to recognized political parties in India in cases of individuals, firms,companies?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

27 October 2014 There is a tax benefit that is available when MONEY is donated to a political party which is in the form of a deduction under Section 80GGC of the Income Tax Act for the Individual. This is a deduction which means that the amount of the donation would be reduced from the taxable income of the individual and hence the tax calculation would have to be made only on the remaining amount. In this way it provides a relief so that the final tax burden on the individual is less. The amount of the deduction is 100 per cent so the full amount of the MONEY that is donated would be eligible for the deduction unlike several types of donations to charitable institutions where only 50 per cent of the amount becomes eligible for the benefit.
Taking the benefit
There has to be some element of care that is undertaken because if the donation is in cash then the benefit would not be available to the individual so one has to be careful when making the donation and not give cash. The other thing is that donations in kind would also not be eligible so one cannot give some item and then try and claim the benefit equivalent to the value of the item. This makes it clear that the donation has to be in line with the method of payment that can be traced to the individual like a cheque.

All parties accept donations, from individuals and companies(80GGB). The law only requires the donor be an Indian citizen, living in this country or abroad. If a non-resident Indian, he should have a valid passport.

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