As per the Income Tax Act, political contributions are not eligible for deduction under Section 80G, which generally deals with deductions for donations made to certain charitable institutions. However, Section 80GGB and Section 80GGC provide deductions for political contributions.
Here are the key points related to political contributions in India:
Deduction for Political Contributions by Companies (Section 80GGB)
- Companies making political contributions are allowed to claim a deduction under Section 80GGB.
- The contribution must be made by an account payee cheque or draft or by electronic transfer.
Deduction for Political Contributions by Individuals (Section 80GGC)
- Individuals making political contributions are allowed to claim a deduction under Section 80GGC.
- Similar to companies, the contribution must be made by an account payee cheque or draft or by electronic transfer.
It’s essential to note that there are specific disclosure requirements for political contributions, and contributions in cash are not allowed. Also, there are limits on the amount of deduction that can be claimed under these sections.