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Published on:
March 21, 2023
By
Pranjal Gupta

Section 80GGC of Income Tax Act

Section 80GGC of the Income Tax Act, 1961 provides for a deduction in respect of any amount paid by an individual or a Hindu Undivided Family (HUF) as a contribution to a political party or an electoral trust. The deduction is available to individuals who do not have any income from business or profession and do not receive any house rent allowance. The maximum amount of deduction available under this section is 100% of the contribution made, subject to a maximum limit of 7.5% of the individual's total taxable income.

It is important to note that the contribution made must be in the form of a cheque or a draft or through any other mode, as specified by the Central Government, in order to claim the deduction under this section. Additionally, the political party or electoral trust should be a registered political party or an electoral trust, as the case may be, and the contribution should be made during the financial year in which the deduction is claimed.

What is Section 80GGC?

Section 80GGC of the Income Tax Act, 1961 provides for a tax deduction for individuals or Hindu Undivided Family (HUF) who make contributions to a political party or an electoral trust. The deduction is available to individuals who do not have any income from business or profession and do not receive any house rent allowance. The maximum amount of deduction that can be claimed under this section is 100% of the contribution made, up to a limit of 7.5% of the individual's total taxable income.

In order to claim the deduction under this section, the contribution must be made through cheque, draft, or any other mode specified by the Central Government. The political party or electoral trust must also be a registered entity, and the contribution must be made during the financial year in which the deduction is claimed. It is important to keep proper records and receipts of the contributions made for tax purposes.

Who can avail 80GGC deduction?

The deduction under Section 80GGC of the Income Tax Act, 1961 is available to individuals (including HUF) who make contributions to a political party or an electoral trust. In order to be eligible for the deduction, the following conditions must be met:

1. individual must not have any income from business or profession.

2. individual must not receive any house rent allowance.

3. contribution must be made through cheque, draft, or any other mode specified by the Central Government.

4. political party or electoral trust must be a registered entity.

4. contribution must be made during the financial year in which the deduction is claimed.

It is important to note that the deduction under Section 80GGC is not available to companies or firms. Additionally, the contribution must be made to a registered political party or electoral trust in order to be eligible for the deduction.

Which contributions and donations can be deducted under section 80GGC?

Section 80GGC of the Income Tax Act allows individuals to claim a deduction for contributions or donations made towards political parties. The amount of deduction under this section is limited to 100% of the total contribution or donation made by the individual. The deduction under this section can only be claimed by individuals who are residents of India and do not have any taxable business income. It is important to note that the contributions or donations must be made by way of a cheque, draft or any other mode that can be accounted for and must be made to a registered political party. The political party must also be recognized as such by the Election Commission of India.

Section 80GGC deduction limits

The deduction limit under Section 80GGC of the Income Tax Act is 100% of the total contribution or donation made by the individual to a recognized political party. There is no upper limit on the amount of contribution or donation that can be made, but the deduction is limited to 100% of the amount contributed. It is important to note that the contribution or donation must be made by way of a cheque, draft or any other mode that can be accounted for and must be made to a registered political party that is recognized as such by the Election Commission of India.

Documents required for section 80GGC

The following documents are typically required to claim a deduction under Section 80GGC of the Income Tax Act:

1. Proof of contribution: The individual must have a receipt or proof of payment of the contribution made to the recognized political party. The receipt should clearly mention the name of the political party and the amount contributed.

2. PAN Card: The PAN card of the individual making the contribution is required to claim the deduction.

3. Bank Statement: The bank statement showing the payment made to the political party should be kept as evidence.

4. Form 26AS: Form 26AS is an annual tax statement that reflects all tax-related transactions during the financial year. It is advisable to check Form 26AS to ensure that the contribution made has been reflected correctly.

5. ITR: The individual must file their income tax return (ITR) to claim the deduction. The deduction must be claimed while filing the ITR for the relevant financial year.

It is advisable to consult a tax professional to ensure that all necessary documents are in place and the deduction is claimed correctly.

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