Section 80GGC is a tax-saving tool that encourages honest political contributions. It allows individuals (not companies) to deduct 100% of donations made to registered political parties or electoral trusts from their taxable income, provided the donation is made through digital or banking channels. There’s no upper limit on the amount donated, but the benefit is available only under the old tax regime. To claim this deduction, donors must ensure the Election Commission or CBDT recognizes the recipient, retain official receipts, and report the amount under Schedule VI-A in their ITR.
In this blog, we will understand the meaning of Section 80GGC, its benefits, eligibility criteria, amount of deductions allowed, and the procedure for claiming deduction under Section 80GGC in detail.
What is Section 80GGC?
Section 80GGC provides income tax deductions to individuals who make contributions to political parties or electoral trusts. The primary objective behind this section is to promote clean and accountable political funding. The section was introduced to bring transparency to political donations. This provision enables taxpayers to reduce their taxable income by the amount contributed, provided certain conditions are met.
Benefits of Section 80GGC Deduction
- Reduces Tax Liability: The full amount donated under Section 80GGC qualifies for a deduction from the taxpayer’s gross total income, effectively reducing the overall tax liability.
- Encourages Transparent Political Funding: Section 80GGC promotes legitimate and traceable financial support to political parties, which reduces the chances of black money in politics.
- No Maximum Limit on Deduction: There is no upper limit on the donation amount, giving individuals the freedom to contribute any amount and still claim full deduction.
- Simple and Hassle-Free Compliance: Claiming the deduction is simple and easy, especially when donations are made using digital payment methods.
- Promotes Digital Transactions: By disallowing cash donations, the section encourages the use of formal banking channels and discourages unaccounted political funding.
Who Can Claim Deduction Under Section 80GGC?
The following taxpayers are eligible:
- Individuals (Resident or Non-Resident)
- Hindu Undivided Families (HUFs)
- Firms
- Association of Persons (AOPs) or Body of Individuals (BOIs)
Not Eligible:
- Companies (can claim under Section 80GGB instead)
- Local Authorities
- Artificial Juridical Persons wholly or partly funded by the government
What Donations Qualify?
Eligible donations must satisfy all of the following:
- Recipient: Must be a political party registered under Section 29A of the RPA, 1951, or a CBDT-approved electoral trust.
- Payment Mode: Must be strictly non-cash; it could be either cheque, demand draft, net banking, UPI, RTGS/NEFT, or credit/debit card.
- Donor’s Own Contribution: Must be made in the contributor’s name, not on behalf of another.
- Financial Year Application: Donations must apply to the relevant assessment year’s financial year.
Amount of Deduction Allowed
- 100% of the amount donated is eligible for deduction under Section 80GGC of the Income Tax Act, 1961.
- There is no upper limit on the amount that can be claimed as a deduction.
- The deduction is available only if the contribution is made in a financial year relevant to the assessment year.
Eligible Contributions Under Section 80GGC
You can claim a deduction for contributions made to:
- A registered political party (recognized by the Election Commission of India)
- An electoral trust approved by the Central Board of Direct Taxes (CBDT)
Conditions for Claiming Deduction
To claim a deduction under Section 80GGC:
- Contribution must be made through non-cash modes such as cheque, demand draft, electronic transfer, UPI, etc.
- The receiving political party or electoral trust must be registered and recognized
- The donation must not be made in cash, as cash donations are not eligible for deductions
- Contributions must be made in the taxpayer’s own name and not on behalf of another person
How to Claim Deduction Under Section 80GGC?
1. Ensure payment is made through non-cash modes
- Donations must be made through cheque, demand draft, internet banking, UPI, debit/credit card, or any other electronic mode.
- Cash donations are not allowed under this section.
2. Obtain a receipt or proof of payment from the political party or electoral trust
- The receipt should include your name, amount donated, date, mode of payment, and the PAN or registration details of the recipient party or trust.
3. While e-filing, enter the details of the contribution under Schedule VIA → Section 80GGC
- Log in to the Income Tax e-Filing portal.
- While filling out your return under the old tax regime, go to Chapter VI-A deductions.
- Under Schedule VIA, enter the donation amount under Section 80GGC of the Income Tax Act, 1961.
4. Preserve acknowledgment receipts, bank statements, or digital transaction proof for verification by tax authorities, if required
- Keep all documents handy in case your return is selected for scrutiny.
- These include the donation receipt, bank statement, and the recipient’s PAN or registration number.
5. Ensure the political party or electoral trust is listed on the Election Commission of India or the CBDT portal
- The party must be registered under Section 29A of the Representation of the People Act, 1951.
- Electoral trusts must be approved by the Central Board of Direct Taxes (CBDT).
Illustration
Gross Total Income: ₹10,00,000
Donation to a registered political party (via UPI): ₹1,00,000
Deduction under Section 80GGC: ₹1,00,000
Tax Regime: Old Tax Regime because 80GGC is not permitted under the new tax regime.
Taxable Income: ₹9,00,000
| Slab Range | Tax Rate | Amount Taxed | Tax (₹) |
| 0 – ₹2,50,000 | Nil | ₹2,50,000 | ₹0 |
| ₹2,50,001 – ₹5,00,000 | 5% | ₹2,50,000 | ₹12,500 |
| ₹5,00,001 – ₹9,00,000 | 20% | ₹4,00,000 | ₹80,000 |
| ₹92,500 |
Add 4% Health & Education Cess
4% of ₹92,500 = ₹3,700
Total Tax Payable = (₹92,500 + ₹3,700) = ₹96,200
| Without 80GGC | With 80GGC |
| Taxable Income = ₹10,00,000 | Taxable Income = ₹9,00,000 |
| Tax = ₹1,12,500 + ₹4,500 cess | Tax = ₹92,500 + ₹3,700 cess |
| Total Tax = ₹1,17,000 | Total Tax = ₹96,200 |
Tax Saving after claiming deduction = ₹20,800
Taxpayer Responsibilities – A Checklist
To ensure compliance and minimize risk:
- Confirm party/trust is registered under Section 29A (RPA, 1951).
- Use non-cash payment methods exclusively.
- Keep detailed receipts and payment proof.
- Declare correctly via Schedule VI‑A while e-filing ITR.
- Rectify mistakes before the deadline
- Retain evidence for at least 6 years (audit window).
- Seek professional advice if donation amounts are substantial or queries arise.
Conclusion
Section 80GGC is more than a tax deduction; it is a step toward responsible citizenship and cleaner governance. In addition to providing a significant chance for tax savings, it enables taxpayers to contribute financially to the nation’s development. It promotes a more open and democratic process by encouraging cashless, traceable transactions. Contributions must, however, adhere to all rules in order to receive these benefits, particularly the requirements for recipient eligibility and non-cash modality.
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