There are 2 different sections for donation to political parties

Section 80GGB-Its for Companies only

Section 80GGC -Its for all except some

Lets study these in detail

 

Section 80GGB

Donation to Political parties/Electoral Trust by Companies

  1. The deduction is allowed to only Indian companies
  2. Donation made by cash not allowed as deduction

 

Section 80GGC

Donation to Political parties/Electoral Trust by Persons other than companies

  1. The deduction is allowed to all except
    1. Local Authority
    2. Artificial judicial person partly or wholly funded by Government
  2. Donation made by cash not allowed as deduction

 

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. 

 

 

Particulars Amt  Donation to Political Party
Income from Salaries xx  
Income from House Property xx  
Profits and Gains of Business and Profession xx <----Disallowed here as per Sec 37(2B)
Income from Capital Gains xx  
Income from Other Sources xx  
Gross Total Income xx  
Less     
Deductions xx <----Allowed here (S ec 80GGB and 80GGC )
Net Total Income    
Tax on Net total Income xx

 

 

 

Note:-

What is Electoral Trust

Electoral Trust  is a non-profit company created in India for orderly receipt of the voluntary contributions from any person and for distributing the same to the respective political parties

Why Companies prefer Electoral Trust?

When companies donate to electoral trusts they do not reportedly have the compulsion of disclosing the parties to which they have made contributions

Example Aditya Birla Group's General Electoral Trust.

  1. Income Tax
  2. Deductions Under Chapter VIA
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CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 8 years. He provides GST Training in Delhi. Register now.