How to claim Section 80GGC or Section 80GGB deduction in the ITR? 

The Income Tax Act, 1961, offers deductions not only for investments or expenses, but also for money spent on socially and democratically important causes such as donations. While Section 80G allows deductions for donations to specified charitable institutions and funds, Sections 80GGB and 80GGC specifically deal with donations made to political parties and approved electoral trusts. This article explains these sections and how to claim the deduction in your Income Tax Return (ITR).

Section 80GGB vs. 80GGC: Who should use which? 

Both Section 80GGB and Section 80GGC are designed to encourage political funding in India. They allow a 100% deduction for donations made to a political party or an approved electoral trust, provided the donation is not made in cash. 

While the objective and conditions are largely the same, they apply to different categories of taxpayers. 

• Section 80GGB applies to Indian companies.
• Section 80GGC applies to non-company taxpayers.

Eligibility criteria for Section 80GGB of the Income Tax Act 

All registered Indian companies are eligible to claim a deduction under Section 80GGB. 

Recipient Requirements: Donations must be made to a political party under Section 29A of the Representation of the People Act, 1951, or an approved electoral trust.

Mode of Payment: Donations must be made via cheque, demand draft, or electronic transfer (no cash).

Documentation: A valid receipt from the recipient party or trust is required.

Contribution Limit: Donations can be up to 7.5% of the company’s average net profits over the last three financial years.

Exclusions: Government enterprises and companies operating for less than 3 years may have restrictions.

However, the deduction is not available to: 

• Government companies or agencies
• Companies incorporated less than three years ago
• Foreign companies
• Companies opting for the new tax regime

Eligibility criteria for Section 80GGC 

The following taxpayers can claim a deduction under Section 80GGC:

• Individuals
• Hindu Undivided Families (HUFs)
• Firms
• Association of Persons (AOPs)
• Body of Individuals (BOIs)
• Artificial juridical persons not wholly or partly funded by the government

This deduction is not available to:

• Companies
• Local authorities
• Taxpayers opting for the new tax regime 

How to claim Section 80GGC or Section 80GGB deduction in your ITR

Claiming a deduction under Section 80GGB or 80GGC is a straightforward process. 

1. Check your eligibility to determine whether Section 80GGB or 80GCC applies to you.
2. Choose the correct ITR form based on your taxpayer category.
3. Keep the donation receipt handy, ensuring it contains all required details.
4. Log in to the income e-filing portal and navigate to the deductions section.
5. Enter the donation details, including the donee's name, address, Permanent Account Number (PAN), donation amount, mode of payment, and applicable deduction percentage.  

 Important limits and conditions to keep in mind

• Cash donations are not eligible: Donations must be made via legitimate banking channels such as cheque, demand draft, or electronic modes like UPI, NEFT or RTGS.
• Only available under the old tax regime: Deductions under Section 80GGB and 80GGC are not allowed under the new tax regime.
• No upper limit on deduction: Eligible donations can be claimed as a deduction up to 100% of the donated amount.
• Political party must be registered: The recipient political party must be recognised under Section 29A of the Representation of the People (RPA) Act, 1951. 

Conclusion

Both Sections 80GGB and 80GGC encourage companies and individuals to participate in India’s democratic process by offering a 100% tax deduction on eligible political donations. Understanding the eligibility criteria and conditions under these sections is key to optimising your tax liability. With proper documentation and accurate filing, claiming this deduction is simple and hassle-free.