The section 80GGC of the Income Tax Act allows the deductions from the total income of an individual taxpayer for his/her contributions made towards electoral trust or political party. The complete contribution amount made in section 80CCG is eligible for a deduction of tax. However, the deduction amount allowed should not be more than the total income that is taxable.
Eligibility Criteria of Section 80GGC
Any individual taxpayer can claim deduction under section 80GGC. The artificial judicial person or local authority is not eligible to claim the deductions under this section. In addition to this, for the contributions that qualify for the deductions, u/s 80GGC should not be from the bank through cheque, internet banking, demand draft, debit/credit card, wire transfer. The contributions that an individual makes towards any political party or electoral commission in cash are not eligible for the deductions of Section 80GGC.
- Political Party: A political party is an association or individual citizen’s body of India that is registered with the Election Commission is considered as election body.
- Electoral Trust: Electoral trust is a non-profit entity or Section 8 Company that is created in India to orderly receive the voluntary contributions through any individual and to distribute the same to the respective political parties. The main objective of an electoral trust is for distributing the contributions obtained by it to some political party.
Section 80GGC – Bare Act –Income Tax Act
Deductions with Respect of the Contributions that an Individual Gives to a Political Party: In order to compute the total income of a taxpayer, be it any person, except artificial juridical person and local authority completely or partially funded through the Government there has must be deduction of any amount of contribution that is made by him/ her in the last year towards some political party.
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