S. 80GGC was introduced by Finance Act 2009 closer to last General Elections to make election funding transparent and free of corruption, this section appears to be even more relevant in the current times. This section is meant for donations made by non-corporate assesses to political parties (for donations made by corporate assesses to political parties, Section 80GGB is relevant).
Who is eligible?
Any person, other than
- Local Authority
- Artificial Juridical Person, wholly or partly funded by Govt.
To whom donation can be made?
- Political parties registered u/s 29A of the Representation of the People Act, 1951
- Electoral Trust
- Donations made in cash are not allowed for deduction. This exception was introduced with effect from 1st April 2014 and will be applicable for A.Y. 2014-15 and onwards.
- Contributions made in kind are also not allowed for deduction.
S. 80GGC is meant for non-corporate taxpayers where deduction can be claimed for donations made to political parties. Donation made in cash is not eligible for tax deduction. 100% of donation can be claimed for deduction u/s 80GGC. Taxable income reduces by the amount of donation made to eligible parties.
“Political party” means a political party registered u/s 29A of the Representation of the People Act, 1951 (43 of 1951).
As Per Section 80GGC, of the Income Tax Act, 1961-
Deduction in respect of contributions given by any person to political parties.
In computing the total income of an assessee, being any person, except local authority and every artificial juridical person wholly or partly funded by the Government, there shall be deducted any amount of contribution made by him, in the previous year, to a political party [or an electoral trust].
The following proviso shall be inserted before the Explanation to section 80GGC by the Finance Act, 2013, w.e.f. 1-4-2014:
Provided that no deduction shall be allowed under this section in respect of any sum contributed by way of cash.
—For the purposes of sections 80GGB and 80GGC, “political party” means a political party registered under section 29A of the Representation of the People Act, 1951 (43 of 1951).