Tax FAQ

Advise You Can Trust On!

Income Tax Deduction for Contribution to Political Parties under Section 80GGC of Income Tax Act

Income Tax Deduction for Contribution/Donation to Political Parties under Section 80GGC of Income Tax Act. Any person other than local authority and every artificial juridical person wholly or partly funded by the Government can claim unlimited deduction for contribution, donation made to political parties in India. Political parties for section 80GGC means political party registered with registered with election commission of India under section 29A of Representation of the People Act,1951. For Donation by Indian Company to political party deduction can be claimed under section 80GGB (Read Section 80GGB: Deduction in Respect of Contributions Given to Political Parties or Electoral Trust)

Meaning of Person as per section 2(31) of Income Tax Act.

Person includes— (i)  an individual,(ii)  a Hindu undivided family, (iii)  a company, (iv)  a firm, (v)  an association of persons or a body of individuals, whether incorporated or not,(vi)  a local authority, and (vii)  every artificial juridical person, not falling within any of the preceding sub-clauses. Explanation.—For the purposes of this clause, an association of persons or a body of individuals or a local authority or an artificial juridical person shall be deemed to be a person, whether or not such person or body or authority or juridical person was formed or established or incorporated with the object of deriving income, profits or gains

 Reference: Section 80GGC for Deduction in respect of contributions given by any person to political parties.

80GGC. 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.

Explanation.—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).

Representation of the People Act,1951: REGISTRATION OF POLITICAL PARTIES
29A. Registration with the Commission of associations and bodies as political parties.
29B. Political parties entitled to accept contribution.
29C. Declaration of donation received by the political parties

29A. Registration with the Election Commission of associations and bodies as political parties.— (1) Any association or body of individual citizens of India calling itself a political party and intending to avail itself of the provisions of this Part shall make an application to the Election Commission for its registration as a political party for the purposes of this Act.

(2) Every such application shall be made,—
(a) if the association or body is in existence at the commencement of the Representation of the People (Amendment) Act, 1988 (1 of 1989), within sixty days next following such commencement;

(3) Every application under sub-section (1) shall be signed by the chief executive officer of the association or body (whether such chief executive officer is known as Secretary or by any other designation) and presented to the Secretary to the Commission or sent to such Secretary by registered post.

(4) Every such application shall contain the following particulars, namely:—
(a) the name of the association or body;
(b) the State in which its head office is situate;
(c) the address to which letters and other communications meant for it should be sent;
(d) the names of its president, secretary, treasurer and other office-bearers;
(e) the numerical strength of its members, and if there are categories of its members, the numerical strength in each category;
(f) whether it has any local units; if so, at what levels;
(g) whether it is represented by any member or members in either House of Parliament or of any State Legislature; if so, the number of such member or members.
(5) The application under sub-section (1) shall be accompanied by a copy of the memorandum or rules and regulations of the association or body, by whatever name called, and such memorandum or rules and regulations shall contain a specific provision that the association or body shall bear true faith and allegiance to the Constitution of India as by law
established, and to the principles of socialism, secularism and democracy, and would uphold the sovereignty, unity and integrity of India.
(6) The Commission may call for such other particulars as it may deem fit from the association or body.
(7) After considering all the particulars as aforesaid in its possession and any other necessary and relevant factors and after giving the representatives of the association or body reasonable opportunity of being heard, the Commission shall decide either to register the association or body as a political party for the purposes of this Part, or not so to register it;
and the Commission shall communicate its decision to the association or body:
Provided that no association or body shall be registered as a political party under this sub—section unless the memorandum or rules and regulations of such association or body conform to the provisions of sub—section (5).
(8) The decision of the Commission shall be final.
(9) After an association or body has been registered as a political party as aforesaid, any change in its name, head office, office-bearers, address or in any other material matters shall be communicated to the Commission without delay.

29B. Political parties entitled to accept contribution.—Subject to the provisions of the Companies Act, 1956 (1 of 1956), every political party may accept any amount of contribution voluntarily offered to it by any person or company other than a Government company:
Provided that no political party shall be eligible to accept any contribution from any foreign source defined under clause (e) of section 2 of the Foreign Contribution (Regulation) Act, 1976 (49 of 1976).

(b) “Government company” means a company within the meaning of section 617; and
(c) “contribution” has the meaning assigned to it under section 293A, of the Companies Act, 1956 (1 of 1956) and includes any donation or subscription offered by any person to a political party; and (d) “person” has the meaning assigned to it under clause (31) of section 2 of the Income-tax Act, 1961 (43 of 1961), but does not include Government company, local authority and every artificial juridical person wholly or partially funded by the Government.

29C. Declaration of donation received by the political parties.—(1) The treasurer of a political party or any other person authorised by the political party in this behalf shall, in each financial year, prepare a report in respect of the following, namely:
(a) the contribution in excess of twenty thousand rupees received by such political party from any person in that financial year;
(b) the contribution in excess of twenty thousand rupees received by such political party from companies other than Government companies in that financial year.
(2) The report under sub-section (1) shall be in such form as may be prescribed.
(3) The report for a financial year under sub-section (1) shall be submitted by the treasurer of a political party or any other person authorised by the political party in this behalf before the due date for furnishing a return of its income of that financial year under section 139 of the Income-tax Act, 1961 (43 of 1961), to the Election Commission.
(4) Where the treasurer of any political party or any other person authorised by the political party in this behalf fails to submit a report under sub-section (3) then, notwithstanding anything contained in the Income-tax Act, 1961 (43 of 1961), such political party shall not be entitled to any tax relief under that Act.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>