Section 80GGC of Income Tax Act

Taxpayers looking to avail of deductions under Section 80GGC are required to fulfil the following eligibility criteria:

1. Any individual or person.
2. One cannot be a local authorites.
3. One cannot be an Artificial Judicial Person, who receives funding from the government either partially or completely.
4. Companies cannot avail of deductions under this Section

Documents Required for Section 80GGC

To qualify for tax deductions under this section, you are required to provide the following documents:

1. A donation receipt as proof.
2. The receipt should include details such as PAN, TAN, the political party's address, fund registration number, payment method, and donor's name.
3. Completion and timely submission of the income tax return form.

Features of Section 80GGC

The main features of Section 80GGC are:

1. Deductions under this section can be availed only by individuals ie: non-corporate assessees or taxpayers
2. Not applicable for Tax Deducted at Source (TDS) of an individual’s salary 
3. This section was added in the Finance Act 2009, with the objective of introducing transparency into electoral funding as well as making it corruption free
4. Deductions under this section are not applicable on tax deducted at source on an individual's salary. Only employees who draw a salary with no other income from other businesses can avail deductions under this section while filing their tax returns.

Donations or Contributions under Section 80GGC

As per Section 80GGC, an individual can make a donation or contribution only to the following entities:

1. An electoral trust
2. Any political party registered under Section 29A of the Representation of the People Act, 1951.

Deductions Under Section 80GGC

1. An individual can contribute up to a maximum amount of 10% of the gross total income.

1. A tax deduction of 100% of the contribution can be claimed which reduces the individual’s total taxable income in proportion to the contribution made.

Procedure to avail of Deductions under Section 80GGC

1. Taxpayers or assessees looking to claim deductions under Section 80GGC can do so while filing their tax returns simply by including the amount of their contribution to a political party in the space provided for Section 80GGC in the Income Tax Return form. This Section appears under Chapter VI-A deductions in the Income Tax Return form.
2. Donations made to political parties should be made solely through legitimate banking portals such as online internet banking, cheques, debit cards, credit cards, demand drafts etc. in order to claim deductions under this section.

Section 80GGC Deduction Limits

There are specific limitations on deductions under Section 80GGC of the income tax. Here are the exemption limits for Section 80GGC:

1. Taxpayers can claim a deduction for 100% of their donation to a registered electoral trust or political party. However, as this section falls under Chapter VIA deductions, the total deduction cannot exceed the individual's total income.
2. Donations or contributions to political parties or electoral trusts in cash or kind are not eligible for tax deductions under Section 80GGC. This amendment has been in effect since the fiscal year 2013-2014.
3. To claim deductions under Section 80GGC, contributions or donations should be made to political parties through legitimate banking channels, such as internet banking, credit cards, debit cards, cheques, demand drafts, etc.
4. If you fail to provide sufficient documentation when claiming the deduction and filing your tax return, the authorities have the authority to deny the tax deduction claim under this section.

Situations in which an Individual Ineligible to Claim a Tax Deduction Under Section 80GGC 

There are specific situations in which individuals are ineligible to claim a tax deduction under Section 80GGC:

1. Individuals who make contributions to a political party using cash payments are not eligible for tax deductions under this section. Donations made through demand drafts, cheques, or online payments are the accepted modes for qualifying tax deductions.
2. Individuals who provide gifts or donations in forms other than monetary contributions cannot claim tax deductions under Section 80GGC.

Section 80GGC of the Income Tax Act aims to ensure transparent electoral funding and minimize corruption. It encourages individuals to financially support the political system by allowing them to claim tax deductions for such donations, thereby reducing their tax liability.

Exceptions under Section 80GGC

There are certain exceptions under which contributions made to political parties will not be eligible for deductions. These exceptions are as follows: 

1. Donation remitted in the form of cash is exempted under this section 
2. Donation in the form of kind that includes gift or favours are not eligible for tax deductions

Difference Between Section 80GGB and Section 80GGC 

1. Section 80GGB is applicable for any Indian companies contributing to any political party and can claim deduction for the donated amount.

1. While, under Section 80GGC, only individuals can claim deduction for amount donated to political parties.