Applicable to: Indian Companies
This section provides 100% tax deduction for contributions made by Indian companies to registered political parties or electoral trusts, promoting transparent political funding.
Key Features (AY 2025-26)
1. Eligible Donors
- Only Indian companies(registered under the Companies Act).
- Excluded entities:
- Government companies
- Companies operational for <3 years.
2. Eligible Donees
- Political partiesregistered under Section 29A of the Representation of the People Act, 1951.
- Electoral trustsapproved under the Electoral Trusts Scheme, 2013.
3. Deduction Amount
- 100% of the contribution(no upper limit).
- Example:A ₹10L donation reduces taxable income by ₹10L.
4. Payment Mode
- Non-cash only(cheque, draft, electronic transfer, electoral bonds).
- Cash donations disallowed.
5. Required Documents
- Receipt from the political party/trust (with PAN, registration number).
- Proof of payment (bank statement/transaction record).
Conditions & Compliance
- Disclosure:Companies must report donations in their Profit & Loss Account.
- No double benefit:Cannot claim the same expense under other sections (e.g., CSR).
- Scrutiny risk:Recent IT Department crackdowns on dubious donations.
Comparison with Section 80GGC
| FEATURE | SECTION 80GGB (COMPANIES) | SECTION 80GGC (INDIVIDUALS) |
| Eligibility | Indian companies only | Individuals, HUFs, firms |
| Deduction | 100% of contribution | 100% of contribution |
| Cash Donations | Not allowed | Not allowed |
Pro Tips
- Verify party registrationusing the Election Commission’s PPRTMS portal.
- Avoid cash paymentsto ensure deduction eligibility.
- Maintain recordsfor 8 years (IT scrutiny period).
FAQs
Q: Can a company donate to multiple parties?
A: Yes, but each donation must comply with Section 80GGB rules.
Q: Are electoral bond donations eligible?
A: Yes, but post-Supreme Court 2024 ruling, transparency requirements apply.
Q: Is there a cap under the Companies Act?
A: Yes, donations cannot exceed 7.5% of average net profits (3 years).
Section 80GGB incentivizes corporate political funding with full tax deductibility, but strict compliance is essential. Companies should prioritize non-cash payments and proper documentation to avoid disputes.
