Deduction for donations given to political parties

donation to political party
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Last updated on May 14th, 2022 at 11:57 am

What is section 80GGB? | Who can claim deduction u/s 80GGB?

An Indian Company can claim the deduction under Chapter VI-A of any amount that is contributed/ donated through a bank to a Political Party or Electoral Trust.

For the purposes of sections 80GGB, “Political party” means a political party registered under section 29A of the Representation of the People Act, 1951 (43 of 1951).

What is section 80GGC? | Who can claim deduction u/s 80GGC?

An Individual Taxpayer including NRI, Hindu Undivided Family, Association of Person, Body of Individuals, Partnership Firms, Foreign Company or Artificial Juridical Person(which is not be funded by Government) can claim the deduction under Chapter VI-A of any amount that is contributed/donated through a bank to a Political Party or Electoral Trust.

Note: Local Authority or Artificial Juridical Person funded partly or wholly by Government cannot claim deduction u/s 80GGC.

What is the limit for deduction u/s 80GGB & u/s 80GGC?

As such, there is no limit to donating/contributing to a Political Party or Electoral Trust. But to claim deduction under section 80GGB or section 80GGC payment should be made through banks only for the above donations.

Note: The deductions are covered by Chapter VI-A so the maximum deduction that can be claimed is restricted to aggregate taxable income.

Can deduction be claimed if the donation is in cash or kind?

Deduction under section 80GGB or section 80GGC can not be claimed if made in any other mode than from bank through cheque, net banking, debit card, credit card, UPI, etc.

What documents do you need for claiming the deduction for donation u/s 80GGB or80GGC?

To claim deduction one needs the receipt issued by the Political party or Electoral Trust which should contain the following details of

Political party/ Electoral Trust – Name, Address, PAN, TAN, Registration number
Donor – Name, Address, PAN, Amount of donation, and mode of payment

Note: Receipt is not to be submitted or uploaded on Income Tax Portal while filing the return of income but it will serve as documentary evidence/proof of donation.

Can NRI or Foreign Company claim deduction u/s 80GGB or 80GGC?

NRI and Foreign Company can claim a deduction for a donation to Political Party or Electoral Trust u/s 80GGC. (not u/s 80GGB)

Can you claim the above deduction in a revised or belated return?

The above deduction can be claimed while filing the original return u/s 139(1) or/and belated return u/s 139(4) or/and revised return u/s 139(5).

Unanswered Question……

The government had announced a Form 10BD to report the details of receipt of donations by Charitable and Religious Trusts and Institutions. This is likely to bring more transparency to the Revenue.
Political Parties & Electoral Trusts also receive donations in the same manner and taxpayers claim the deduction for the same while furnishing their Income Tax Returns. Why such a Form for reporting the details of donors and the amount of donation is not prescribed for them?

CA Ankita Khetan
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