Section 80GGC: Overview
Section 80GGC of the Income Tax Act, 1961 allows individuals to claim a deduction for contributions made to political parties or electoral trusts. This deduction encourages transparent political funding and offers tax benefits to donors.
Criteria to Claim Deductions under Section 80GGC
- Eligible Donors: The deduction is available to all individuals except local authorities and artificial juridical persons wholly or partly funded by the government. Companies (registered under the Companies Act) are not eligible for deduction under 80GGC; instead, they may claim under Section 80GGB.
- Eligible Recipients: Donations must be made to a political party registered under Section 29A of the Representation of the People Act, 1951, or to an approved electoral trust.
- Mode of Payment: The donation must be made by any mode other than cash (e.g., cheque, electronic transfer, demand draft). Cash donations are not eligible for deduction.
- No Maximum Limit: There is no upper limit on the amount eligible for deduction. The entire amount donated (subject to meeting the other conditions) is deductible from gross total income.
- Documentation: The donor should obtain a receipt/certificate as proof of payment that includes the donor’s name, amount, and registration details of the receiving entity.
Notable Points
- Donations cannot be made in kind, nor can goods and services be substituted for money.
- The deduction is allowed on actual payment made during the relevant financial year.
- The recipient political party or electoral trust must be registered and approved by the necessary authorities
Donation Deduction Limits under Section 80GGC
There is no specified maximum limit on the amount that can be claimed as a deduction under Section 80GGC. An individual can claim a deduction for the entire amount donated to a registered political party or electoral trust, provided all other eligibility criteria are met.
100% Deduction: Unlike other charitable deduction sections (such as Section 80G), Section 80GGC allows a full 100% deduction of the donated amount with no upper cap restriction. If you donate ₹1 lakh through a non-cash mode to an eligible political party, you can claim the entire ₹1 lakh as a deduction.
Why People Received Section 80GGC Notices:
In the past few years, a wave of notices from the Income Tax Department has confronted thousands of Indian taxpayers who claimed deductions under Section 80GGC for donations to political parties. What triggered this sudden nationwide scrutiny? The answer lies in a massive, multi-crore scam involving bogus political donations, shell political outfits known as Registered Unrecognised Political Parties (RUPPs), and a determined government crackdown including high-profile raids.
RUPPs, or Registered Unrecognised Political Parties, are parties that have been registered with the Election Commission but haven’t earned the status of state or national parties. Over the years, thousands of such entities mushroomed across India – many operating only on paper or from tiny, makeshift offices, with no real grassroots activity.
The Crackdown: Raids, Discoveries, and Delisting
Alarmed by a surge in suspicious deduction claims, the Income Tax Department intensified data analytics and cross-verification. This led to large-scale raids in 2022 and again in 2025 at over 200 locations across India, including Mumbai, Delhi, Gujarat, Uttar Pradesh, and more. Shocking details emerged: one 100-square-foot office in Mumbai’s Sion slum reportedly received over ₹50 crore in donations, while another tiny entity in Borivali raked in over ₹70 crore.
The probe unearthed nearly ₹5,500 crore routed through 36 shell parties with over 1.6 lakh suspicious donors. Investigators found forged receipts, documentation of cash returns, and lists of donors receiving back money after claiming tax breaks. The raid trail led to hawala operators and revealed accommodation entry rings involving RUPPs – sometimes without the parties even maintaining a proper office or records.
In response, the Election Commission launched parallel action:
- In 2025, the ECI delisted 345 RUPPs for being inactive
- Previously, 198 RUPPs were struck off from the list for being non-existent
- In 2022, the EC announced action against over 2,100 RUPPs for flouting rules, including failures to file monetary contributions and update address information
- Delisted parties lose the privilege of fielding candidates under a common election symbol.
Why Taxpayers Received Notices
The main reasons for receiving income tax notices under Section 80GGC are:
- Donation Made to Fake/Shell Parties: Donations made to RUPPs that were later found to be non-existent or existing only on paper attracted scrutiny and notices.
- Cash Mode or Returned Funds: Deductions claimed for amounts that were returned to taxpayers in cash, thus violating the explicit ban on cash donations under 80GGC.
- Mismatched Records: Discrepancies between what donors claimed and what parties reported in their tax and compliance filings.
- Disproportionate Deductions: Deductions claimed far in excess of reported income, triggering automatic risk flags in the ITD system.
- Organized Entry Operators: Involvement with intermediaries or consultants offering dubious “return schemes” for donations, as exposed by recovered documents during raids.
Modes of Receiving Notices Under Section 80GGC
The Income Tax Department employs multiple channels to send notices and communications to taxpayers regarding Section 80GGC deduction claims. Understanding these modes is essential for taxpayers to stay informed and respond promptly.
Digital/Online Modes
Email Notifications: The Income Tax Department sends email communications to the registered email address on file with the assessee’s income tax profile. The typical email contains a message such as: “Dear Taxpayer, please ensure that the deduction claimed under Section 80GGC in your Income Tax Return is genuine and that you have the necessary documentary evidence to support it. Regards, Income Tax Department.” Taxpayers must ensure their email address is updated and current on the Income Tax portal to receive these communications.
SMS Notifications: Many taxpayers have received SMS messages from the Income Tax Department regarding their Section 80GGC deduction claims. These SMS messages typically ask taxpayers to verify the claimed deduction amount and to correct any errors by updating their Income Tax Return by a specified deadline (such as March 31, 2025).
Income Tax e-Filing Portal: The primary digital platform for communicating with taxpayers is the official Income Tax e-Filing Portal. Registered users can log in to their account to view notices, intimations, and letters issued by the Assessing Officer. The portal contains an e-Proceeding section with two tabs: “For Your Action” (showing active and ongoing proceedings) and “For Your Information” (showing closed proceedings). Taxpayers can download notices and submit responses directly through this portal.
Summon Issued u/s 131(1A)
Under Section 131(1A) of the Income Tax Act, the department has wide powers to investigate suspected cases of false claims or tax evasion. In recent times, several taxpayers have received summons or inquiries under this section specifically relating to deductions claimed under Section 80GGC.
These notices are issued when the department suspects that the claimed donations may not be genuine or properly supported by evidence. The summons often directs the taxpayer to furnish details such as bank statements, receipts, and confirmation from the recipient entity, and in some cases also mentions that the taxpayer may surrender the claim within seven days if it is incorrect. This effectively serves as an opportunity for voluntary correction before the department proceeds with deeper investigation or assessment.
Failure to respond to such summons can attract penalties and lead to disallowance of the deduction during scrutiny. Therefore, taxpayers who receive such communication should treat it seriously, respond within the given time, and provide complete and verifiable information to the assessing authority.
Notice issued under Section 143(2)
Recently, many taxpayers have received notices under Section 143(2) of the Income Tax Act in connection with deductions claimed under Section 80GGC. A notice under Section 143(2) signifies that the return has been selected for scrutiny assessment, meaning the Income Tax Department intends to verify the correctness of the income reported and deductions claimed. In several cases, the department is specifically examining the genuineness of 80GGC deductions based on data received from political parties or electoral trusts. Since these cases are now under scrutiny, the concerned taxpayers cannot file an updated return (ITR-U) to voluntarily correct or withdraw the 80GGC claim, as the law prohibits filing ITR-U once a case is selected for scrutiny or assessment proceedings are pending.
Notice issued under Section 148
In recent instances, several taxpayers have received Section 148 notices linked to claims under Section 80GGC, as the department suspects that certain donations claimed as deductions were not genuine. Once such a notice is issued, the taxpayer cannot file ITR-U (updated return) for that year because reassessment proceedings are already initiated. The taxpayer should carefully review the notice, check the reasons for reopening (available under Section 148A(b) proceedings), and file a detailed reply along with supporting documents. Ignoring the notice may lead to ex-parte assessment, addition of income, interest, and penalty. Hence, timely compliance and a properly documented response are essential to safeguard one’s tax position.
What actions need to be taken after notices
Scenario 1: Received SMS /Email/or 131(1a) summan
What It Means
An SMS or email from the Income Tax Department asking to verify or explain 80GGC deduction claims is NOT a formal legal notice. It is an informal preliminary inquiry.
Typical Messages:
- Please verify the deduction claimed under Section 80GGC in your ITR
- Submit proof of political donation within specified days
- Reply to this email or summon u/s 131(1a) regarding your Section 80GGC claim
Can ITR-U Be Filed?
YES – ITR-U CAN BE FILED after receiving SMS/Email inquiry or 131(1a) notice
Key Conditions:
- The SMS/Email is just an informal inquiry, NOT a formal Section 143(2), 148, or 131(1A) notice
- No formal assessment proceeding has been initiated
- Action must be taken IMMEDIATELY – Do not wait
Scenario 2: Assessment Reassessment Notices Received u/s 148/143(2)
When an assessee receives a formal income tax notice under Section 148 (reassessment) or Section 143(2) (scrutiny assessment) related to Section 80GGC donations, immediate and careful action is crucial.
Step-by-Step Actions
- Verify Notice Authenticity and Details
- Confirm the notice is authentic by checking the DIN (Documentation Identification Number) on the Income Tax e-Filing Portal.
- Carefully note the relevant assessment year and deadlines prescribed in the notice.
- Consult a Qualified Tax Professional
- Engage a Chartered Accountant or tax lawyer experienced with 80GGC cases and tax assessments.
- Review the notice and assess the basis for reopening the case or scrutiny.
- Gather and Organize Relevant Documentation
- Original donation receipts from political parties.
- Bank statements showing non-cash donations (cheques, RTGS, NEFT).
- Proof of political party’s valid registration under Section 29A.
- Documentation of source of funds (salary slips, business income proof, etc.).
- Correspondence with the political party or intermediaries, if any.
- Copies of previously filed Income Tax Returns and related schedules.
- Prepare a Detailed Written Response
- Address the specific queries raised in the notice.
- Provide clear evidence supporting the validity of your 80GGC claims.
- Explain your donation methodology and source of funds.
- If the department’s claim is partially or wholly incorrect, present your legal and factual arguments.
- Submit Response Before Deadline
- Use the Income Tax e-Filing Portal’s e-Proceedings section for submission whenever possible.
- Alternatively, send your response by registered post or email, keeping proof of delivery.
- Submit all relevant documents along with the written response within the given deadline (usually 30 days).
- Keep Track of Assessment/Reassessment Order
- Download and preserve all assessment orders, communications, and notices.
- Review the order critically to evaluate disallowances or penalty impositions.
- Exercise Appeal Rights if Necessary
- If aggrieved by the assessment/reassessment order, file an appeal before the Commissioner (Appeals) within 30 days.
- Continue further appeals before ITAT and higher courts as required.
Avoid Filing ITR-U After Receiving 143(2) or 148 Notices: Once these formal notices are issued, filing an Updated Return (ITR-U) is disallowed and will be rejected by the department.
