21 July 2022
Sir/Madam One of my clients have salary income around 15lacs yearly. He wants to save tax payable by way of donation given to political person. > Can anyone suggest me that it is faith full or not?? > How to make political contribution i.e online or offline?? > How to know which political party are register u/s 29 , so we can get deduction from gross total income? > What is the limit for political contribution for fy-2022-23??
10 July 2024
Making political donations for tax-saving purposes is governed by specific rules under the Income Tax Act in India. Here are the key points to consider regarding political contributions:
### 1. Eligibility and Tax Benefits:
- **Eligibility**: Any individual can make donations to political parties registered under Section 29A of the Representation of the People Act, 1951.
- **Tax Benefits**: Donations made to eligible political parties qualify for deduction under Section 80GGC of the Income Tax Act, 1961. However, this deduction is not available for donations made in cash exceeding Rs. 2,000. The maximum deduction allowed is up to 100% of the donated amount.
### 2. How to Make Political Contributions:
- **Online**: Many political parties provide online platforms on their official websites where you can make contributions electronically.
- **Offline**: Contributions can also be made through cheque or demand draft directly to the political party's designated bank account.
### 3. Checking Registration of Political Parties:
- To ensure a political party is eligible for tax benefits under Section 29A: - Verify the party's registration status under Section 29A of the Representation of the People Act, 1951. - The Election Commission of India (ECI) website typically lists registered political parties.
### 4. Limit for Political Contributions (FY 2022-23):
- The maximum deduction that can be claimed under Section 80GGC for political contributions is the total amount donated during the financial year. - There is no specific limit imposed by the Income Tax Act on the amount you can donate, but the deduction is limited to the extent of your total taxable income.
### Important Considerations:
- Ensure that the political party you intend to donate to is registered under Section 29A to qualify for tax benefits. - Keep proper documentation of the donation receipt or acknowledgment from the political party for tax filing purposes. - Avoid making cash donations exceeding Rs. 2,000 per donation, as they are not eligible for deduction.
### Conclusion:
Donating to political parties as a means to save taxes is a legitimate option, provided the donations are made to registered political parties under Section 29A of the Representation of the People Act, 1951. Always consult with a tax advisor or chartered accountant for specific advice tailored to your client's circumstances and to ensure compliance with tax laws.
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