Introduction:

The taxpayer is entitled to exclude from his total income the part of the sum which has been donated to electoral trusts or political parties in accordance with the two latter parts of the Section 80 GGC of the Income Tax Act of 1961. This can be a fiscal measure, allowing either a partial (50%) to full (100%) deductions for the expenses, offering substantial tax relief and inevitable strengthening of the political system. Likewise the Section 80GGC is similar to Income Tax Act 1961 which imposes a limit netting 10% gross earnings of individual donor to be given to any political body of his or her desire.

Section 80GGC:

Section 80GGC of Income Tax Act is the such part of the Act which titles taxpayers’ donation to the political parties or electoral trusts as deductible in tax. This measure was aimed to conducting transparent activities associated with the electoral funding and to banish corruptive cases. Moreover, it acts as an instrument that drives the amount of money claimed by individuals to the political affairs, thus, allowing them to deduct the amount donated from income tax. Consequently, the contribution amount of individuals is reduced.

Features of Section 80GGC:

• This part heads the noted cases only for individuals, not for entities like corporations and partnerships.
• In such instance, no part will be levy from the of the tax deducted from your salary income. If you belong to those employees whose salary is draw solely from employer and supposed to be registered under the above section are the only one that can be taken advantage of the provision.
• Section 80GGC of the Income Tax Act, 1961 lies in Chapter VIA, which deals with deductions and therefore ensures that the deducted amount cannot exceed the tax liability of the individual. This protective, asserted by the government, will prevent people using of this part for unjustified advantage.
• The 2009 Finance Act was intended to provide transparency and ethics in the electoral process and fight corruption. The government believes that private donations contribute to the stability of India’s political system, not only by avoiding taxes, but also by allowing deductions from donations from multiple parties to ensure fairness

Eligibility for Deduction Under Section 80GGC :

To claim the 80GGC deduction, individuals must meet the following criteria:

• Taxpayers seeking deductions can be individuals or legal entities.
• A local government is not allowed to pay the 80GGC reduction.
• Companies are not entitled to benefits under this section.
• A bogus claimant from the Government is not treated as an assessee or an eligible taxpayer to claim deduction of 80GGC.

Deduction limits of Section 80GGC:

There are specific limits for deduction under section 80GGC for income tax. Here is the list of restrictions imposed under 80GGC.

• Contributions or donations to political parties or electoral trusts in cash or kind are not eligible for tax deduction under Section 80GGC. These changes took effect from FY 2013-2014.
• Failure to provide sufficient documentation at the time of filing the cancellation tax return authorizes the Government to deny a tax deduction under this section
• Taxpayers can give a percentage of their contributions to a registered electoral trust or political party as a deduction. However, because this section imposes a Chapter VIA deduction, the total deduction cannot exceed the total income of the individual making the contribution.

Documents required for  80GGC deduction:

To qualify for a tax credit under this section, you must submit the following forms.

• A receipt is required as proof of donation.
• The receipt should contain details like PAN, TAN, address of political party, bank account number, mode of payment and name of issuer.
• The income tax return must be completed and submitted within the specified time.

Exceptions to 80GGC:

Certain exemptions are not available under Section 80GGC of the Income Tax Act. These exceptions includes the following.

• If taxpayers donate money or money to political parties, they will not qualify for the 80GGC deduction. Following the 2013-14 amendment, this exemption applied to section instructions.
• Taxpayers will not be eligible for any deduction if they use a payment method other than check, debit/credit card, online banking, or demand draft for donations.
• If the amount of contribution exceeds the taxable income of an assessee, they do not get their full deduction under section 80GGC as per the guidelines.

Ineligible to Claim a Deduction:

A person is not eligible to claim deduction under section 80GGC in the following circumstances

• Cash contributions are not eligible for deduction under Section 80GGC; contributions must be made through non-cash modes, such as cheques, bank transfers, or other electronic means.
• Contribution deduction under Section 80GGC is available only for contributions to registered political parties; Donations to unrecognized or unregistered political parties are not eligible for deductions

 Process to Claim section  80GGC Deduction:

• Individuals wishing to claim 80GGC deduction have to include the amount of contributions made to political parties in their Income Tax Return (ITR) which comes under Chapter VIA of the Income Tax Return Form.
• Additionally, taxpayers have to furnish their contribution details to their employer for inclusion in Form 16. It is important to note that taxpayers can also furnish this information in the specified section while filing their Income Tax Return (ITR). ) is giving it.
• Make sure you get a receipt from the political party with the full name and address of the donor. This document should also indicate the amount of contribution made by the assessee, along with the TAN or PAN details of the party. The employer then separates the contribution directly as a contribution to its employees. Employees can request this contribution deduction by providing proof of their employer.

Difference Between Section 80GGB and 80GGC:

Both section 80GGB and section 80GGC apply to deductions relating to political contributions, but they apply to specific entities:

Section 80GGB: 

This section applies to Indian companies or domestic companies that support political parties, and allows them to claim deductions for such contributions as business expenses

Section 80GGC: 

This section applies to individuals who donate to political parties, and allows them to claim a deduction for contributions to registered political parties.

Conclusion:

Thus Section 80GGC of the Income Tax Act, 1961 provides a deduction to individuals who support political parties or electoral trusts. The maximum deduction under this section is 10% of the taxpayer’s gross income. Section 80GGC works to benefit individuals by reducing their tax liability by taking deductions from their gross income.