Tax Deduction On Donations To Political Parties - 80GGC

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  • 22 Feb 2023

Most people are not aware of the fact that contributing monetary assets to political parties have tax benefits Under Section 80GGC of the Income Tax Act, any donation made to political parties is exempt from tax if it satisfies certain conditions. Individuals who wish to donate money to any recognized political party of India or an electoral trust may do so and avail tax deduction on the same. Let’s tackle some of the frequently asked questions about this subject.

Any contribution made by an individual to a political party (registered under Section 29A of the Representation of the People Act, 1951) is fully deductible under Section 80GGC of the Income Tax Act. Contributions made by companies are deductible under Section 80GGB.

Section 293A of Company’s Act, 1956 and Section 293A (1) (a) of Companies Act state that no government company shall contribute any amount, directly or indirectly, to any political party or for any political purpose. Under Sections 3 and 4 of Foreign Contributions (Regulation) Act (FCRA), 1976, political parties are not permitted to accept contributions from foreign companies or companies controlled in India by foreign companies.

Individuals who would like to donate money to political parties may do so by means of cheque, demand drafts or internet banking. Most political parties have established online donation platforms so donations can be made with ease online as well. Do note that you can’t use cash.

No, contributions that are made in kind are not eligible for deduction under Section 80G of the Income Tax Act.

What Is The Deduction Limit?

Maximum deduction allowed under Section 80GGC is 100%. This means that your entire contribution is fully eligible for tax deduction.

What Is The Cap On The Claim Amount?

There is no cap on the claim amount. However, there is an overall limit on total deductions. The total deduction threshold cannot exceed the gross income.

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