Individual taxpayers biggest beneficiary of tax deductions claimed on political donations, Pg6

Key Highlights:

• Tax deductions on political donations are projected to impact revenue by Rs 3,126.12 crore in FY 2024-25.
• Individual/HUF taxpayers claimed the largest share of tax benefits, totaling Rs 1,995.04 crore in FY 2024-25.
• Corporate tax deductions for political donations are projected to reach Rs 860.86 crore in FY 2024-25.
• Deductions can be claimed for donations to political parties via cheque, account transfer, or electoral bonds.

Detailed Insights:

• The projected revenue impact of deductions on political donations is expected to increase by 13% in FY 2024-25 compared to FY 2023-24.
• Since FY 2021-22, individual and HUF taxpayers have surpassed corporations in claiming deductions for contributions to political parties.
• Individual taxpayer deductions for political donations surged post-Covid, peaking at Rs 2,275.85 crore in FY 2022-23.
• Section 80GGB of the Income Tax Act, 1961 allows corporate taxpayers to claim deductions for donations to political parties, excluding cash contributions.
• Section 80GGC of the Income Tax Act, 1961 provides similar benefits to individual and non-corporate taxpayers, with the exception of local authorities.
• Non-corporate taxpayers can claim deductions under Section 80GGC for contributions to parties, even if made in cash.

Key Concepts Involved:

• Section 80GGB: Allows corporate taxpayers to claim deductions for donations to political parties, excluding cash contributions.
• Section 80GGC: Permits individuals, HUFs, and non-corporate entities to claim deductions for contributions to political parties.
• Electoral Bond: A financial instrument for making anonymous donations to political parties in India.