Political donations are a way for individuals to express their support for a certain party or candidate. Such donations are an important source of funding to function their operations and the government also allows deduction on such donations. Section 80GGC of the Income Tax Act allows taxpayers to avail of tax benefits for their contributions to political parties. Hence, if you meet certain eligibility criteria you can claim an 80GGC deduction while filing the ITR.
Eligibility Criteria for Claiming 80GGC Deduction
The following persons are eligible to claim a deduction under section 80GGC:
- Individual
- HUF
- Firm
- AOP (which is not fully or partially funded by government)
- BOI
- Artificial Judicial Person (which is not fully or partially funded by the government)
However, the following persons are not eligible to claim a deduction under section 80GGC:
- Companies
- Local authorities
- Artificial Judicial Person who receives full or partial funding from the government
Eligible entities for the Deduction
To claim the deduction u/s 80GGC, the taxpayer must make a donation or contribution to the below-mentioned entities:
- Political party
- Electoral trust
Note: With respect to sections 80GGB and 80GGC a ‘Political Party’ is defined as a political party registered under section 29A of the Representation of the People Act, 1951.
Section 80GGC Deduction Limits
- The taxpayer can claim the entire (100%) contribution amount made through legitimate banking portals such as Internet banking, Credit/Debit cards, Online payments, etc. as a deduction under this section.
- This deduction falls under Chapter VI A meaning that the total amount of tax deduction must not exceed the complete assessable income of the person.
Exceptions to 80GGC Deduction
- The donation made to political parties or electoral trusts must not be in the form of cash. Hence, if the donations are made in the form of cash then it is not eligible under this section.
- Furthermore, any donation made in the form of gifts or kind cannot be claimed as a deduction under this section.
How to Claim the Deduction?
Eligible persons can claim an 80GGC deduction while filing ITR if all the above-mentioned conditions are fulfilled. The taxpayer can claim the deduction in any of the ITR forms, i.e, ITR 1, ITR 2, ITR 3, and ITR 4 depending upon their income sources.
While filing an ITR, the taxpayer has to mention the following details:
- Date of the contribution
- Amounts (in cash and through other modes)
- Eligible amount of contribution
- Transaction reference number for UPI transfer or cheque number/IMPS/NEFT/RTGS
- IFS code of the bank
Supporting Documents Required
As proof of the donation, the political party will issue a receipt. It must contain the name and address of the party, the amount donated, and the PAN of the party. Further, the mode of payment and donor name should also be mentioned.
Note: Individuals must submit the details of the donations to the employer for inclusion of such information in form 16. If not, then the details must be mentioned in the designated column while submitting tax returns.
FAQs
Under section 80GGC deduction is allowed to all taxpayers other than companies whereas under section 80GGB deductions can be availed by any Indian company.
Yes, one can claim a deduction on donations made to multiple political parties, u/s 80GGC.
There is no restriction on the 80GGC deduction limit. Hence, one can avail a deduction of 100% of the amount contributed, provided that the same is made by any mode other than cash.
No, you need not submit any proof while claiming the deduction at the time of filing the return as you only need to enter the amount of the donation. However, if the AO demands the required proofs, you need to present the same at that time.
Hey @sushil_verma
There are a wide range of deductions that you can claim. Apart from Section 80C tax deductions, you could claim deductions up to INR 25,000 (INR 50,000 for Senior Citizens) buying Mediclaim u/s 80D. You can claim a deduction of INR 50,000 on home loan interest under Section 80EE.
Hey @Dia_malhotra , there are many deductions that you can avail of. Your salary package may include different allowances like House Rent Allowance (HRA), conveyance, transport allowance, medical reimbursement, etc. Additionally, some of these allowances are exempt up to a certain limit under section 10 of the Income Tax Act.
For eg,
Tax on employment and entertainment allowance will also be allowed as a deduction from the salary income. Employment tax is deducted from your salary by your employer and then it is deposited to the state government.
The benefit Section 80EEB can be claimed by individuals only. An individual taxpayer can claim interest on loan of an electric vehicle of up to INR 1.5 lacs u/s 80EEB. However, if the electric vehicle is used for the purpose of business, the vehicle should be reported as an asset, loan should be reported as a liability and the interest on loan can be claimed as a business expense irrespective of the amount. (We have updated the article with the changes).
Thus, if you have a proprietorship business, you should claim interest amount as a business expense only if the vehicle is used for business purpose. However, if it is used for personal purpose, you can claim deduction of interest u/s 80EEB in your ITR since you would be reporting both personal and business income in the ITR (under your PAN).
As per the Income Tax Act, the deduction under Section 80EEB is applicable from 1st April 2020 i.e. FY 2020-21.
Hey @Sharath_thomas , we have updated the content according to the appropriate assessment year. Thanks for the feedback.
No issues. You’re welcome!
Hey @shindeonkar95
In case of capital gain income (LTCG/STCG), transfer expenses are allowed as deduction, except STT.
However, in case of business income (F&O, intraday), all expenses incurred for the business (including STT) are eligible to claim deduction in ITR.
Hope, it helps!
Hello,
Is it possible to claim deductions under S. 80CCF for Infra bonds bought in the secondary market and held to maturity?
There were a number of 10 year infra bonds issued in the 2010- 2013 period, which will start maturing soon. These are all listed on the exchanges (although hardly any liquidity or transactions in them). If I were to buy some of these bonds in the open markets and hold them in my demat to maturity (<3 years), is it possible to claim tax deductions (upto 20k per year) under 80CCF for buying?
I couldn’t find anything on this. Any help is appreciated.
Hello @Veejayy,
Yes you can claim deduction under 80CCF for investment made in specified infrastructure and other tax saving bonds bought in the secondary market and held to maturity.
Deduction under Section 80CCF can be availed only through investment in certain tax saving bonds, issued by banks or corporations after gaining permission from the government which shall be restricted upto 10,000 per year.
These bonds are generally long term bonds, having tenure of more than 5 years with a lock in period of 5 years in most of the cases. These bonds can be sold after the lock in period!
Also, interest earned on these bonds will be taxable.
Hope this helps!
Hi, I need to file my income tax for FY21, I am using Quicko platform for filing, I wanted to confirm if the ELSS investment amount for the FY21 is to be added in the section 80C, since I already the amount of Rs30,072 , should I add my ELSS amount to this existing amount and submit the total
Hey @Sheirsh_Saxena, yes, the investment amount needs to be added under 80C.