Taxation Exam > Taxation Notes > Income Tax for assessment (Inter Level) > Section - 80GGB, 80GGC and Assignment - Taxation
Section - 80GGB, 80GGC and Assignment - Taxation | Income Tax for assessment (Inter Level) PDF Download
Section 80GGB. contribution made to political parties
Indian Company who gives contribution (donation) to any political party or to an electoral trusts, 100% of contribution is allowed as deduction.
Note : Donation made in cash deduction is not available. Donation made through cheque deduction available.
Section 80GGC. contribution made to political parties
In computing the total income of an assessee, being any person, except local authority and every artificial juridical person wholly or partly funded by the Government, there shall be deducted any amount of contribution made by him, in the previous year, to a political party or to an electoral trusts.
Note 1 : Deduction not allowed to that local authority or artificial juridical person if wholly or partly funded by the Government.
Note 2 : Donation made in cash deduction is not available. Donation made through cheque deduction available.
P1:(Page - 11.17) - Mr. J, an Indian citizen, is a Manager with Z Ltd. at Delhi. From September 1, 2016 he was transferred to London branch of the company for 3 years. He submits the following particulars of his income and investments for the PY 2016-17. Compute his total income for the AY 2017-18.
| Salary received in Delhi |
Salary received in London |
||
| 1. | Salary | 16,000 p.m. | 24,000 p.m. |
| 2. | Dearness allowance | 5,000 p.m. | 12,000 p.m. |
| 3. | Car allowance : 25% spent for official duties | 2,000 p.m. | 6,000 p.m. |
| 4. | Education allowance for his child, wholly spent | 550 p.m. | 2000 p.m. |
| 5. | Arrears of salary (not taxed earlier) | 16,250 | nil |
| 6. | Own furnished house along with free watchman | ||
| a. Cost of furniture | 40,000 | 60,000 | |
| b. Salary of watchman | 400 p.m. | 2,000 p.m. | |
| 7. | Use of laptop with internet facility and mobile phone | 7,000 | 18,000 |
| 8. | Employer’s contribution to Recognised Provident Fund | 13% of salary | 14% of salary |
| 9. | Interest on the accumulated balance, @ 12% p.a. | 9,600 | -- |
| 10. | His contribution to the PF | 15% of salary | 15% of salary |
| 11. | Long-term capital gain (Land) | 60,000 | - |
| 12. | Income from Other Sources | 5,000 | - |
| 13. | Deposit in PPF out of foreign income | 2,000 | - |
| 14. | Life insurance premium (on his life) paid out of taxable income. (assured sum Rs. 52,000) |
5,000 | 5,000 |
| 15. | Medical insurance premium for himself and his wife under GIC scheme, paid by cheque out of taxable income. |
12,000 | - |
| 16. | Medical expenses incurred for the treatment of his wife, suffering from cancer, in Rajiv Gandhi Hospital. |
10,000 | - |
| 17. | Donation paid to MCD for family planning. Donation has been paid out of salary income received in London |
10,000 | - |
Ans : 1,43,281 (80,000 + 25,000 + 7,500 + 2,250 + 16,250 + 13,463 + 1,667 + 2,000 + 0 + 4,160 + 2,000 = 1,54,290)
(Sal 1,54,290 + LT 60,000 – OS 5,000 = 2,09,290 – 80C 44,200 – 80D 12,000 – 80DDB 0 – 80G 9,809 = 1,43,281)
P2(Page 11.17): Mrs. X is a lecturer in Delhi university. Compute her total income.
| 1. | Basic pay per month | 15,000 |
| 2. | Dearness Allowance (percentage on Basic Salary) | 20% |
| 3. | House Rent Allowance (percentage on Basic Salary) | 30% |
| 4. | Medical Allowance per month. Total amount actually spent on her own treatment. Rs. 2,000 p.m. | 200 |
| 5. | Wardenship Allowance (per month) | 300 |
| 6. | Rent from House property in Agra (per month) | 2000 |
| 7. | Interest received from Govt. Securities | 5000 |
| 8. | Dividend received from an Indian Company | 1200 |
| 9. | Interest on saving bank | 20,000 |
| 10. | Contribution to Provident Fund (percentage on basic salary) | 10% |
| 11. | Premium paid by cheque on mediclaim insurance policy : | |
| • On health of dependent mother | 25,000 | |
| • On health of independent son | 12,000 | |
| • On health of dependent brother | 11,000 | |
| 12. | Donations to an approved charitable institution | 25,000 |
| 13. | House rent paid (per month) | 7,000 |
Ans : 2,00,620 (IFS 1,80,000 + 36,000 + 0 + 2,400 + 3,600 + 0 = 2,22,000) (IFHP 24,000 – 7,200 = 16,800) (OS 5,000 + 0 + 20,000 = 25,000) (80C 18,000 + 80D 25,000 + 80TTA 10,000 + 80G 10,540)
P3 : Mr. Vignesh, aged 61 years, earned business income (computed) of Rs. 4,25,000. He has earned interest of Rs. 17,000 on the saving bank account with Oriental bank of Commerce during the year. Compute the total income of Mr. Vignesh from the following particulars:
| 1. | A sum of Rs. 23,000 donated in cash to an institution approved for purpose of section 80G for promoting family planning. |
| 2. | Contribution Rs. 2,000 made in cash to an electoral trust. |
| 3. | Paid interest of Rs. 8,000 on loan taken from bank for Engineering course pursued by his son. |
| 4. | Premium of Rs. 17,000 paid by cheque for health insurance of self and his wife. |
| 5. | Rs. 2,000 paid in cash for his health check-up and Rs. 4,000 paid in cheque for health check-up for his parents. |
| 6. | Life insurance premium paid to Max Life Insurance in cash amounting to Rs. 21,000 for insurance of life of his dependent parents. The sum assured on life of his dependent parents is Rs. 1,50,000. |
| 7. | Life insurance premium of Rs. 30,000 paid for the insurance of his life. The sum assured is Rs. 2,50,000. |
| 8. | Life insurance premium paid by cheque of Rs. 18,000 for insurance of life of his major son who is not dependent on him. The sum assured is 1,50,000. |
Ans : BI 4,25,000 + Interest 17,000 = GTI 4,42,000 – 80C 40,000 – 80D 23,000 – 80E 8,000 – 80G nil – 80GGC nil – 80TTA 10,000 = TI 3,61,000.
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FAQs on Section - 80GGB, 80GGC and Assignment - Taxation - Income Tax for assessment (Inter Level)
| 1. What is Section 80GGB? |  |
Ans. Section 80GGB of the Income Tax Act allows Indian companies to claim a deduction for contributions made to political parties. The deduction can be claimed for donations made by cheque or bank draft, limited to 7.5% of the company's net profit before tax.
| 2. What is Section 80GGC? | |
Ans. Section 80GGC of the Income Tax Act allows individuals to claim a deduction for contributions made to political parties. The deduction can be claimed for donations made by cheque or bank draft, limited to 10% of the individual's total income.
| 3. How can I avail the tax benefits under Section 80GGB? | |
Ans. To avail the tax benefits under Section 80GGB, a company needs to make donations to political parties and obtain a receipt from the party. The company should then submit the receipt along with its income tax return to claim the deduction.
| 4. Can an individual claim tax benefits under both Section 80GGB and Section 80GGC? | |
Ans. No, an individual cannot claim tax benefits under both Section 80GGB and Section 80GGC. These sections are mutually exclusive, and individuals need to choose the appropriate section based on their eligibility and the nature of the donation.
| 5. Are there any limits on the tax deduction under Section 80GGB and Section 80GGC? | |
Ans. Yes, there are limits on the tax deduction under Section 80GGB and Section 80GGC. For companies, the deduction under Section 80GGB is limited to 7.5% of the net profit before tax. For individuals, the deduction under Section 80GGC is limited to 10% of their total income.
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