Deductions under Section 80GGB - Explained

To get an idea about the tax deductions on contribution to political parties, by companies or enterprises the primal thing, is to understand the basic rules of the same.

As per Indian Income Tax Act, 1961,there are certain things that one needs to keep in mind when making donation to political parties as a company or an enterprise:

• Any Indian company is permitted to donate money to any political party they are willing to support.
• Under the Section 80GGB the company receives 100% deduction is permitted from the income of the assessee based on the donation amount given to the political parties.
• Any individual can take the donation with the exception of a person belonging to the local authority or an artificial juridical person who is otherwise funded by the government, partially or wholly.
• No cash payments are allowed and only payments made through cheques, demand draft, direct transfer or pay order in account of the respective political parties are allowed. This is done to keep the record of the amount being donated for the political party.
• The political party who is taking the donation has to be registered as per the Section 29A of Representation of the People Act, 1951 or register at an electoral trust.
• The companies do not have any restriction when it comes to the amount they are donating to any political party.
• These donors can also donate to multiple parties.