Section 136 of the Income-tax Act, 2025 — Deduction for Political Contributions by Companies (Old Section 80GGB)

In plain language

What Section 136 says in plain English

Section 136 of the Income-tax Act, 2025 allows an Indian company a deduction for the amount it contributes to a political party or an electoral trust during a tax year — provided the contribution is made in any mode other than cash. This is the direct successor to the old Section 80GGB of the Income-tax Act, 1961, carried forward almost word-for-word into the new Act, which takes effect from 1 April 2026.

In simple terms: if your company gives money to a registered political party (or routes it through an electoral trust) by cheque, demand draft, NEFT/RTGS/UPI or any digital/banking channel, the company can claim 100% of that amount as a deduction from its total income. Cash donations get you nothing.

Who can claim it

• Only an Indian company — meaning a company formed and registered under the Companies Act (2013 or earlier), or otherwise treated as a domestic company under the Act.
• Individuals, HUFs, firms, LLPs and foreign companies cannot use Section 136. Those taxpayers (any non-company person) claim the parallel benefit under Section 137 (old 80GGC) instead.
• Government companies and companies in existence for less than three financial years are barred from making political contributions altogether under Section 182 of the Companies Act, 2013 — so they cannot claim the deduction either.

Key conditions and limits

• No cash allowed. The section deducts amounts contributed "other than by way of cash." Pay by cheque, DD, bank transfer, electoral bond (subject to their legal status) or other digital mode. A cash gift, however genuine, is fully disallowed.
• Eligible recipient. The political party must be registered under Section 29A of the Representation of the People Act, 1951, or the money must go to a registered electoral trust. A contribution to an unregistered outfit does not qualify.
• No monetary ceiling in the tax law. Section 136 itself sets no cap — a company can claim 100% of what it contributes. The practical limit comes from company law, not tax law.
• Meaning of "contribute" borrows from Section 182 of the Companies Act, 2013. This is important: under that definition, money spent by a company on advertising in a souvenir, brochure, pamphlet or similar publication of a political party is deemed to be a political contribution. So such advertising spends both count as contributions and are eligible for deduction.

How company law interacts with this deduction

Because Section 136 imports the Companies Act definition, a valid deduction requires the contribution to be a valid corporate act. Under Section 182 of the Companies Act, 2013, the contribution must be authorised by a Board resolution, and the company must disclose the total amount contributed in its profit & loss account. The earlier 7.5% of average net profits cap was removed by the Finance Act, 2017, so there is no percentage ceiling today — but the disclosure and Board-approval requirements remain.

The concessional tax regime catch

A crucial practical point: a domestic company that has opted for a concessional corporate tax regime — the successors to Section 115BAA (22%) and Section 115BAB (15% for new manufacturers), which appear as Sections 200 and 201 of the 2025 Act — generally forgoes most Chapter VIII / specified deductions, and this deduction is not available in that regime. Companies that have locked into 22% or 15% concessional rates should not assume they can also claim Section 136; they typically cannot.

Practical implications

• Keep the Board resolution, bank proof and party/trust registration details on file — the burden of proof is on the company.
• Never contribute in cash; a single cash payment forfeits the entire deduction on that amount.
• Remember the P&L disclosure — political contributions are not confidential in a company's accounts.
• Advertising in a party's souvenir is treated as a contribution, so budget and document it the same way.
• Contributions are also relevant for MAT (book-profit) and transparency scrutiny; ensure the accounting entry matches the deduction claimed.