Donating To A Political Party – Section 80GGC

The entire amount donated by an individual to a recognized political party is allowed as deduction under Section 80GGC of the Income-Tax Act while computing  gross total income. 

The donation should be made to a political party registered under Section 29A of the Representation of the People Act to avail of this deduction.

With effect from FY14, cash donations to political parties don’t qualify for tax reliefs. So take care to make the payment through banking channels — cheques, demand drafts, credit or debit cards and internet banking — if you are planning to claim tax deductions.

This exemption is part of Chapter VI-A deductions. And under the law, the total deductions under Chapter VI-A cannot exceed the gross income. Other benefits under Chapter VI-A deductions include tax-saving investments under Section 80C, health insurance premium under Section 80D and interest on education loan under Section 80E, among others. These can be claimed against your income from salary and house, but not all sources of income. The Chapter VI-A deductions cannot be claimed against incomes taxed at special rates, such as long-term capital gains, short-term capital gains which are taxed at 15% under Section 111A and winning lotteries or games, which are taxed at a flat rate of 30%. 

Also, most employers usually don’t factor in such donations in employees’ investment declarations and Form 16. So, while your tax-saving investments under Section 80C are taken into account to calculate your tax , exemptions related to donations don’t receive a similar treatment.Employees  have to claim a refund at the time of filing their income tax returns.