The Income Tax Department has recently issued a warning regarding donations claimed under Section 80GGC Verification of the Income-tax Act, 1961. Taxpayers who have claimed deductions for contributions to political parties or electoral trusts are advised to review their claims carefully. This is important as tax authorities may initiate verification of these claims. Taxpayers who have made errors or discrepancies in their Income Tax Returns (ITRs) for the assessment years 2022-23, 2023-24, and 2024-25 have until March 31, 2025, to rectify them.
What is Section 80GGC Verification?
Section 80GGC provides tax deductions for individuals who contribute to political parties or electoral trusts. However, with the recent focus on Section 80GGC Verification, it is crucial that taxpayers ensure their donations are properly documented and verified.
Who Can Avail the Section 80GGC Deduction?
All individuals, including Hindu Undivided Families (HUFs), firms, associations of persons (AOPs), and bodies of individuals (BOIs), can claim this deduction. However, the following entities are not eligible:
- Companies
- Local authorities
- Artificial juridical persons that are wholly or partially funded by the government
Eligible Donations for Section 80GGC Deduction
Taxpayers can claim deductions for contributions made to:
- A registered political party (under Section 29A of the Representation of the People Act, 1951)
- An electoral trust
Verification Process Under Section 80GGC
As part of the ongoing Section 80GGC Verification, the Income Tax Department is now scrutinizing donations. This verification process ensures that all claims are accurate and legitimate. Taxpayers must review their donations to avoid discrepancies.
Deduction Limit Under Section 80GGC
- Taxpayers can claim 100% of their donation as a deduction, provided it does not exceed their total taxable income.
- Only donations made through legitimate banking channels (cheques, demand drafts, credit cards, debit cards, or internet banking) qualify. Cash donations are not eligible for deductions.
- The deduction is available only under the old tax regime.
Income Tax Department’s Warning: Section 80GGC Verification Matters
The Income Tax Department has warned taxpayers that claims under Section 80GGC are being thoroughly verified. If discrepancies are found during the Section 80GGC Verification process, tax authorities may deny the deductions and impose penalties.
What Should Taxpayers Do?
To ensure that their Section 80GGC Verification process is smooth, taxpayers must:
- Review Your Claims: Ensure that the deductions claimed are accurate and supported by proper documentation.
- Maintain Proper Records: Keep receipts of donations, including PAN/TAN of the political party, donation amount, mode of payment, and donation date.
- Update ITRs if Needed: If any errors are identified, taxpayers should update their ITRs for AY 2022-23, 2023-24, and 2024-25 by March 31, 2025.
How to Rectify Errors in ITRs for Section 80GGC Claims
To rectify any errors, taxpayers can revise their ITRs by following these steps:
- Log in to the Income Tax e-filing portal (https://www.incometax.gov.in).
- Select the relevant assessment year (2022-23, 2023-24, or 2024-25).
- Click on ‘Revised Return’ (ITR-U) and make necessary corrections.
- Submit supporting documents, such as donation receipts and bank statements.
- Verify the updated ITR using Aadhaar OTP, EVC, or DSC.
Consequences of False Claims Under Section 80GGC
Taxpayers should be cautious while claiming deductions under Section 80GGC. False claims can lead to:
- Denial of Deduction: Incorrectly claimed donations may be disallowed.
- Tax Penalties: Heavy fines or additional tax liability may be imposed.
- Legal Action: In severe cases, fraudulent claims may attract legal consequences.
Key Takeaways on Section 80GGC Verification
- The Income Tax Department is now actively verifying Section 80GGC claims.
- Taxpayers must review and maintain records of their donations.
- Rectifications can be made by updating ITRs before March 31, 2025.
- Claims must be backed by valid receipts and banking records.
Section 80GGC Verification plays a crucial role in ensuring the legitimacy of donations claimed for tax deductions. With the Income Tax Department focusing on these claims, taxpayers must take the necessary steps to rectify any discrepancies and stay compliant. The deadline for making corrections in ITRs is March 31, 2025, so act soon to avoid penalties and legal issues.
Frequently Asked Questions
No, cash donations are not eligible for deductions under Section 80GGC. Only payments made through banking channels qualify.
If discrepancies are found and not rectified, your deduction claim may be denied, and you may face penalties or additional tax liabilities.
No, deductions under Section 80GGC are available only under the old tax regime.
The political party must be registered under Section 29A of the Representation of the People Act, 1951. Always verify the party’s registration before making a donation.
No, only individuals, HUFs, AOPs, and BOIs can claim this deduction. Companies must claim deductions under Section 80GGB instead.