Contribution to Political parties for claiming deduction under Income Tax Act,1961- Do’s & Don’ts
According to the Income Tax Act, 1961, donations made to political parties are eligible for tax deductions. Section 80GGC of the Income Tax Act provides tax deductions for contributions made to political parties.
The amount of deduction that can be claimed depends on the mode of payment. If the donation is made in cash, the maximum deduction that can be claimed is Rs. 2,000. However, if the donation is made through a cheque or an electronic mode of payment, there is no maximum limit for the deduction.
It is important to note that only donations made to registered political parties are eligible for tax deductions. Additionally, the political party must provide a receipt for the donation, which must contain the name of the donor, the amount donated, and the name of the political party.
Also, it is important to remember that tax deductions can only be claimed if the donation is made from the donor’s taxable income. Non-taxable income cannot be used to claim a deduction.
If you are planning to claim a tax deduction for donations made to political parties under the Income Tax Act, 1961, there are certain important “do’s” that you should keep in mind to ensure that the process is smooth and hassle-free. Here are some of the key “do’s” for claiming a political party donation as a deduction:
1. Donate to a registered political party: To claim a tax deduction, your donation must be made to a registered political party. Be sure to check the registration status of the political party before making a donation.
2. Get a receipt from the political party: To claim a tax deduction, you must have a receipt from the political party that includes the name of the donor, the amount donated, and the name of the political party. Make sure to keep this receipt safely as it will be required when filing your tax returns.
3. Make the donation through electronic mode or cheque: To claim a tax deduction, donations made in cash cannot exceed Rs. 2,000. To avoid any issues, it is recommended that you make your donation through an electronic mode of payment or by cheque.
4. Report the donation in your tax return: Even if you have a receipt from the political party, you must report the donation in your tax return to claim a tax deduction. Be sure to include all the necessary details of the donation in your tax return to avoid any issues with the Income Tax Department.
5. Keep proper records: It is important to maintain proper records of all donations made to political parties. This includes the receipt from the political party, proof of payment, and other relevant documents.
6. Be aware of the maximum deduction limit: There is no maximum limit on the tax deduction that can be claimed for donations made to political parties. However, the amount of deduction that can be claimed depends on the mode of payment, so be sure to keep this in mind when making your donation.
By following these “do’s,” you can ensure that your claim for a tax deduction for political party donations is successful and hassle-free.
Author Bio
Sir,
A good article on deduction u/s. 80GGC. However, it is necessary to bring the fact that any contribution (donation) made in cash to a registered political party is neither allowable to a company u/s. 80GGB nor to a qualified person u/s. 80GGC of the Act.
Hence, the mentioning of deduction for contribution (donation) in cash is allowable to the extent of Rs. 2,000/- is allowable is incorrect.
For information only.
Thanks.
*Moderator,
please ignore earlier comment as it contains a clerical mistake.