Section 80GGB Tax Deductions on Contribution by Companies to Political Parties

Despite of being allowed to donate for political parties, individuals/ companies/ enterprises need to take care of certain points before doing so. Income Tax Act, 1961 imposes some restriction for this purpose and tax deductions, which include

  • There is no hassle to any company in India to donate for any party where they are willing to do so.
  • A donor is free to donate to any number of parties.
  • Except for a person of local authority or artificial jurisdiction who is otherwise funded by government (partially or fully), any individual can receive the donation.
  • With a clause of no payments through cash, one can donate only via cheque, banker cheque( demand draft), direct transfer or pay order in the respective political party's account.
  • A political party cannot receive donation until registered as per section 29A of the Representation of People Act, 1951 or at an electoral trust.
  • The companies can donate any amount to the parties
  • Under section 80GGB, 100% deduction from income is permitted from the company's income depending upon the amount of the donation given to political party.

Some expenses like TV commercials, ads, radio jingles and social media ads done by political parties is also considered to be under the same head. Amount spent by any company for publicizing in any magazine owned by political party is exempted from tax under section 80 GGB of Income Tax Act, 1961. If there are proper proofs with the company regarding the ads, there is not any limit or restriction for amount to be spent.

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