Section 137 of the Income-tax Act, 2025 — Deduction for Contributions by Any Person to Political Parties (Old Section 80GGC)

In plain language

What Section 137 means in plain English

Section 137 of the Income-tax Act, 2025 lets you reduce your taxable income by the amount you donate to a registered political party or an electoral trust — as long as you don't pay in cash. It is the direct successor to the old Section 80GGC of the Income-tax Act, 1961, carried forward almost word-for-word into the new Act that takes effect from 1 April 2026. The idea is simple: the government wants political funding to flow through the banking system where it can be traced, and it rewards clean, documented giving with a tax break.

• Who gets the deduction: "any person" other than an Indian company. In practice this means individuals, Hindu Undivided Families (HUFs), firms/LLPs, AOPs and BOIs, and other assessees.
• How much: generally 100% of the amount contributed is deductible from your gross total income — there is no fixed rupee ceiling in the section itself.
• The golden rule: the payment must be made by any mode other than cash (cheque, NEFT/RTGS, UPI, net-banking, card, demand draft).

Who can claim it — and who cannot

Section 137 applies to an assessee other than a local authority and an artificial juridical person wholly or partly funded by the Government. So:

• Eligible: Individuals (salaried or self-employed), HUFs, partnership firms, LLPs, Associations of Persons (AOP) and Bodies of Individuals (BOI).
• Not eligible under this section: Indian companies — they claim the same benefit under the companion provision Section 136 (old Section 80GGB). Local authorities and government-funded artificial juridical persons are also excluded.

Key conditions and limits

• No cash, ever. A contribution paid in cash gets you zero deduction, no matter how large. Digital or banking channels only.
• Only to a recognised recipient. The money must go to a political party registered under Section 29A of the Representation of the People Act, 1951, or to an electoral trust (approved under the electoral-trust scheme, old Section 13B).
• Deduction cannot exceed income. Being a Chapter VIA-type deduction from gross total income, it can bring taxable income down but cannot create or increase a loss — you cannot deduct more than your gross total income.
• Keep proof. Retain the party's official receipt showing its name, PAN, registration number and the mode of payment, plus your bank statement.

How it interacts with other provisions and the tax regimes

This is the point most taxpayers miss. Deductions of this kind are not available under the new (default) tax regime. Section 137 can be claimed only if you opt for the old tax regime. If you are on the concessional new-regime slabs, you forgo this deduction. Section 137 sits alongside Section 136 (companies, old 80GGB) and is separate from ordinary charitable donations under Section 133 (old Section 80G) — a donation to a political party is not an 80G donation, and vice versa. Note that the tax department has, in recent years, sent verification notices to taxpayers who claimed unusually large 80GGC/Section 137 deductions, so only claim genuine, bank-traceable contributions.

Practical implications

• Pay the party or electoral trust digitally and collect a stamped receipt the same day.
• Enter the deduction in the correct schedule of your ITR and cross-check that you are filing under the old regime.
• Do not round up or "arrange" contributions through intermediaries — mismatches between your claim and the party's reported receipts are a common trigger for scrutiny.