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What is the procedure for getting deduction of donation made to political parties by a company?
Procedure for Claiming Deduction on Donations by a Company (Section 80GGB) 1. Ensure Eligibility Applicable Provision: Companies (and other entities like firms, LLPs, etc.) can claim the deduction under Section 80GGB. Recipient Requirements: The donation must be made to a politically registered partRead more
Procedure for Claiming Deduction on Donations by a Company (Section 80GGB)
1. Ensure Eligibility
2. Maintain Proper Documentation
3. Claiming the Deduction
4. Additional Tips
By following these steps, a company can effectively claim a 100% deduction on donations made to eligible political parties under Section 80GGB, thereby reducing its taxable income.
Read:How an Individual can get deduction of donation made to political parties?
See lessHow an Individual can get deduction of donation made to political parties?
Did you know? If you donate to a political party, you can claim a 100% tax deduction on the donated amount! Let’s break it down in simple terms. 1. Who Can Claim the Deduction? ✅ Only Individual Taxpayers (both salaried and self-employed).❌ Not available to companies, firms, or any other artificialRead more
Did you know? If you donate to a political party, you can claim a 100% tax deduction on the donated amount! Let’s break it down in simple terms.
1. Who Can Claim the Deduction?
✅ Only Individual Taxpayers (both salaried and self-employed).
❌ Not available to companies, firms, or any other artificial entities (they can claim under Section 80GGB).
2. How Much Deduction Can You Claim?
👉 100% of the donated amount is deductible – there’s no upper limit on the deduction!
👉 However, cash donations are not allowed.
3. What Are the Conditions for Claiming Deduction?
🔹 The donation must be made to a registered political party or an electoral trust.
🔹 The donation must be made through non-cash modes (bank transfer, cheque, UPI, digital wallets, etc.).
🔹 Political parties must be registered under Section 29A of the Representation of the People Act, 1951.
4. How to Claim the Deduction?
📌 While filing your Income Tax Return (ITR-1 or ITR-2), enter the total donation amount under Section 80GGC.
📌 Maintain proof of payment, such as a bank statement, digital receipt, or acknowledgement from the political party.
Example Calculation
Let’s say your taxable income is ₹8,00,000 and you donate ₹50,000 to a political party via bank transfer.
✅ Your taxable income after deduction = ₹8,00,000 – ₹50,000 = ₹7,50,000
✅ You save tax on ₹50,000, reducing your tax liability.
Final Thoughts
💡 If you plan to donate to a political party, go cashless to claim the tax benefit. Ensure the party is registered, and always keep proof of donation.
See lessWhat are the benefits available to startups under Income Tax Act?
Starting a business in India? The government provides several tax benefits to encourage startups and ease their financial burden. Below is a simple breakdown of key tax advantages available to eligible startups. 1. Tax Holiday (Section 80-IAC) – 100% Profit Deduction Who can claim? DPIIT-recognizedRead more
Starting a business in India? The government provides several tax benefits to encourage startups and ease their financial burden. Below is a simple breakdown of key tax advantages available to eligible startups.
1. Tax Holiday (Section 80-IAC) – 100% Profit Deduction
2. Exemption from Angel Tax (Section 56(2)(viib))
3. Carry Forward of Losses (Section 79)
4. Lower Corporate Tax Rate
5. Other Benefits
✅ Self-Certification for Compliance: Startups can self-certify compliance with labor & environmental laws for 3-5 years.
✅ Faster Patent & Trademark Registration: Startups get a 50% rebate on trademark fees and 80% rebate on patent filing fees.
Final Thoughts
These tax benefits help startups reduce costs, improve cash flow, and grow faster. However, startups must ensure they meet eligibility conditions and file the necessary documents on time to claim these benefits.
See lessWhat types of deductions available to disable person under Income Tax Act?
Tax Deductions for Disabled Persons Under the Income Tax Act Section Who Can Claim? Applicable For Deduction/Exemption Amount Conditions 80U Disabled Individual Self - ₹75,000 (Disability 40%-79%) - ₹1,25,000 (Severe Disability 80% & above) - Requires a government medical certificate. - No medicRead more
Tax Deductions for Disabled Persons Under the Income Tax Act
– ₹1,25,000 (Severe Disability 80% & above)
– No medical bills required.
– ₹1,25,000 (Severe Disability 80% & above)
– Fixed deduction, no proof of actual expenses required.
– ₹1,00,000 (Senior Citizen)
– Requires a medical prescription from a specialist.
– No separate proof required apart from disability certificate.
Is rebate of section 87A allowed to NRI also?
No, Non-Resident Indians (NRIs) are not eligible for the rebate under Section 87A of the Income Tax Act, 1961. This rebate is exclusively available to Resident Individuals whose total taxable income does not exceed the prescribed limit. Who Can Claim Rebate Under Section 87A? ✅ Only Resident IndividRead more
No, Non-Resident Indians (NRIs) are not eligible for the rebate under Section 87A of the Income Tax Act, 1961. This rebate is exclusively available to Resident Individuals whose total taxable income does not exceed the prescribed limit.
Who Can Claim Rebate Under Section 87A?
✅ Only Resident Individuals can claim the rebate.
✅ The total taxable income (after deductions) must not exceed ₹7,00,000 for FY 2023-24 & FY 2024-25 (under the new tax regime).
✅ The maximum rebate available is ₹25,000.
Why is Section 87A Not Available for NRIs?
🔹 Residential Status Restriction: The Income Tax Act explicitly restricts this rebate to “Resident Individuals”.
🔹 Different Tax Treatment for NRIs: NRIs are taxed only on their Indian-sourced income (income earned in India), and they do not receive the same benefits as resident taxpayers.
🔹 Separate Exemptions & Deductions for NRIs: NRIs can claim deductions under Section 80C, 80D, and other specific provisions, but not the 87A rebate.
Conclusion
If you are an NRI, you cannot claim the rebate under Section 87A. However, you can still reduce your tax liability by using other available deductions and planning your taxable income efficiently.
See lessWhy agricultural Income is Tax Free in India?
Why is Agricultural Income Tax-Free in India? Agricultural income is exempt from Income Tax in India under Section 10(1) of the Income Tax Act, 1961. The government provides this exemption due to historical, economic, and social reasons. Key Reasons for Exemption of Agricultural Income 1. To SupportRead more
Why is Agricultural Income Tax-Free in India?
Agricultural income is exempt from Income Tax in India under Section 10(1) of the Income Tax Act, 1961. The government provides this exemption due to historical, economic, and social reasons.
Key Reasons for Exemption of Agricultural Income
1. To Support Farmers & Rural Economy
✅ A large portion of India’s population depends on agriculture for livelihood.
✅ Taxing farmers could increase their financial burden and affect agricultural productivity.
2. Constitutional Provisions (State vs. Centre Power)
✅ As per the Constitution of India, the power to tax agricultural income lies with the State Governments, not the Central Government.
✅ The Income Tax Act is a Central law, so it cannot impose tax on agricultural income.
3. Unpredictability of Agricultural Income
✅ Farming depends on rainfall, climate, and natural calamities.
✅ Fluctuating income levels make taxation impractical for farmers.
4. Encouragement for Agricultural Growth
✅ Tax exemption acts as an incentive for farmers to expand production and improve food security.
✅ Supports rural employment and economic development.
5. Historical Perspective
✅ In British India, agricultural income was taxed, leading to resentment among farmers.
✅ Post-independence, the government decided to exempt agricultural income to promote rural welfare.
Is Agricultural Income Completely Tax-Free?
🔹 Yes, but only if it is purely agricultural income from activities like crop cultivation, sale of farm produce, and land rent received from agricultural land.
🔹 If a person earns both agricultural and non-agricultural income, the partial integration method applies for tax computation.
Conclusion
Agricultural income is tax-free in India to support the rural economy, comply with constitutional provisions, and protect farmers from economic hardships. However, discussions on taxing large-scale agribusinesses continue as part of tax reforms.
Read: How to compute Income Tax on agriculture income?
See lessHow to compute Income Tax on agriculture income?
How to Compute Income Tax on Agricultural Income? Under the Income Tax Act, 1961, agricultural income is exempt from tax as per Section 10(1). However, if a taxpayer earns both agricultural and non-agricultural income, the partial integration method is used to determine the applicable tax rate. WhenRead more
How to Compute Income Tax on Agricultural Income?
Under the Income Tax Act, 1961, agricultural income is exempt from tax as per Section 10(1). However, if a taxpayer earns both agricultural and non-agricultural income, the partial integration method is used to determine the applicable tax rate.
When is Agricultural Income Considered for Tax Computation?
The partial integration method applies only if:
✅ Agricultural income exceeds ₹5,000, AND
✅ Non-agricultural income exceeds the basic exemption limit (₹2,50,000 / ₹3,00,000 / ₹5,00,000 depending on age & category).
Step-by-Step Computation of Tax on Agricultural Income
Step 1: Compute Total Income
Step 2: Apply the Partial Integration Method
Tax is computed in three parts:
Step 3: Apply the Applicable Tax Rate & Add Cess
Example Calculation
Let’s assume a taxpayer has:
🔹 Non-Agricultural Income = ₹8,00,000
🔹 Agricultural Income = ₹3,00,000
Step A: Compute Tax on (₹8,00,000 + ₹3,00,000) = ₹11,00,000
Step B: Compute Tax on (₹3,00,000 + ₹2,50,000) = ₹5,50,000
Final Tax Calculation:
✅ Tax Payable = ₹1,32,000 – ₹22,500 = ₹1,09,500
✅ Add 4% Cess = ₹1,13,880
🔹 Total Tax Payable = ₹1,13,880
Key Points to Remember
✅ Agricultural income alone is tax-free, but it affects the tax rate on other income.
See less✅ Partial integration applies only if agricultural income > ₹5,000.
✅ Different exemption limits apply based on the taxpayer’s category (individual, senior citizen, etc.).
✅ Agricultural income from tea, rubber, and coffee plantations is partially taxable under Rule 7, 7A, and 7B.