Section 80GGC of Income Tax Act

  • Author :
  • TATA AIG Team
  • Published on :
  • 11/12/2023

We all find one or the other ways to save taxes on our hard-earned income. Section 80 of the Indian Income Tax Act opens up the options for availing of a range of deductions to effectively reduce taxable income.

We are all aware of the basic deduction sections like Section 80C and Section 80D, but some specific sections can allow us to save more taxes. One such provision is Section 80GGC of the Income Tax Act, which allows you to save on taxes by contributing or donating to certain organisations.

What is Section 80GGC?

Section 80GGC of the Income Tax Act, 1961 allows the assessee to procure tax deductions for contributing to political parties. It is advanced to benefit taxpayers who make donations to political parties or any electoral trusts.

The government introduced this section to bring transparency in political and electoral funding and reduce corruption.

Who is Eligible for Section 80GGC Deductions?

It is primary to check the qualifications of the donor and receiver before making a contribution with the intent to opt for Section 80GGC.

Donor Eligibility

  • Any person except

  • Local authority

  • An artificial juridical person wholly or partly funded by the Government

  • Companies

This means an individual, firm, AOP, BOI, HUF, Artificial or judicial person who is not wholly or partly assisted by government funds can claim deduction under this section.

Receiver Eligibility

Donations or Contributions are to be made only to:

  • Political parties or

  • Electoral funds

The above should be registered under registered under Section 29A of the Representation of the People Act, 1951.

Rate of Deduction Under Section 80GGC

This section does not state the particular 80GGC deduction limit of the amount one can donate.

An assessee can claim 100% of contributions or donations made to registered electoral trusts or political parties. It is important to note that this should not increase your gross total income for the financial year.

Thus, the entire contribution amount is covered under the Section 80GGC limit.

Section 80GGC Exemptions

Here are some Section 80GGC exemptions that you should know before making a donation.

Amount paid in cash/kind is not eligible for tax deduction (With effect from FY 2014)

(One can make the payment using a debit/credit card, internet banking, cheque, demand draft, etc.)

Income tax form to be submitted within the specified period.

Any donation or contribution made without proper proof of documentation.

Documents required for claiming deduction

A donation receipt with PAN/TAN details of the receiver. The details of the address of the political party, fund registration number, payment method, and donor's name should be clearly mentioned on the receipt.

Process to Claim Tax Deduction under 80GGC

Let’s have a look at the process of claiming an 80GGC deduction.

Go to the Income Tax e-Filing Portal

Fill out the Income Tax Return (ITR) as you normally would

Under Section VI A - Deduction, opt for 80GGC

Fill in the TAN/PAN details of the Receiver, the amount of deduction, and select the payment method from the given list.

Proceed with the filing.

In the case of Salaried employees:

An employee would need to furnish these details to the employer or the proper authority responsible for collecting the TDS.

To Sum Up

In conclusion, Section 80GGC of the Indian Income Tax Act offers a valuable avenue for taxpayers to reduce taxable income by contributing to political parties or electoral trusts.

By ensuring eligibility criteria are met and following proper documentation, individuals can claim a 100% deduction on their contributions, thereby saving on taxes and fostering transparency in political funding.

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