Tax Alert: Income Tax sending Summons u/s 131(1A) for Donations made to Political Parties:

Tax Alert: Income Tax sending Summons u/s 131(1A) for Donations made to Political Parties Earlier, the tax department has issued a warning message for taxpayer, in which it was stated that the deduction claimed under Section 80GGC for donation in ITR may be verified. So, it was advised to salaried taxpayers that it is important to keep a track record of any donations made in these 3 years. The message issued by the Income Tax Department stated, “Dear Taxpayer, It is observed that you have claimed deduction under section 80GGC of Rs 250000 in your ITR for A.Y. 2023-24. It is requested that the claim may be verified and mistake, if any, may be rectified by updating the ITR for A.Y. 2023-24 by 31.03.2025.” Now, the taxpayers started receiving summons under Section 131(1A) for donations made to political parties. It has come to the notice of this office that you have claimed a deduction under Section 80GGC of the Income Tax Act, 1961, for donations made to a political party or electoral trust in the AY 2021-22. In this regard, those individuals who have received the summons, hereby, are directed to furnish the following details and documents: 1. Kindly provide details regarding your nature of business or profession. 2. Kindly provide the bank account statements for all your bank accounts for FY 2020- 3. Kindly provide details regarding your source of income for FY 2019-20, 2020-21 and 2021-22. 4. Kindly provide audited financial statements for FY 2019-20, 2020-21 and 2021-22. 5. Please provide the details of deduction under Section 80GGC of the Income Tax Act of 1961 for the AY 2021-22. Including the name of the political party or electoral trust to which the donation was made and the registration details or a copy of the registration certificate of the political party or electoral trust. 6. Please provide the total amount of donation you are claiming under Section 80GGC. 7. Please confirm the amount you have claimed for deduction under Section 80GGC is in line with your income records and that no part of it has been claimed under any other section or benefit in your tax return. 8. Kindly provide the following details of deduction claimed u/s 80GGC of the Act in FY 2020-21

a) Details of the political party or electoral trust to whom the donation was made.

b) PAN of the political party or electoral trust.

c) How did you come in contact with the political party/electoral trust?

d) Name of the contact person in the political party/electoral trust.

e) With due diligence did you carry out before making donations to the Public Political Party?

f) Have you given donations to any political party or electoral trust in any year apart from FY 2020-21? If yes, then kindly provide details of the same with documentary proof.

g) Whether the political party fights an election from the constituency in which you reside. If yes, kindly provide details regarding the same.

h) Mode of payment for donation to political party/electoral trust. Kindly provide the documentary proof for the same.

i) Kindly provide the receipt for the donation.

j) Is the political party registered under Section 29A of the Representation of the People Act, 1951, or an electoral trust approved by the CBDT? If yes, provide the registration details or proof of registration of the political party/electoral trust.

k) Have you received any declaration from the political party/electoral trust confirming its compliance with the provisions under the Income Tax Act, 1961? If so, please provide a copy of that declaration.

Section 80G for Donation

Section 80G is a provision under the Income Tax Act of India that allows taxpayers to claim deductions for donations made to specified charitable institutions and funds. The purpose of this section is to encourage individuals and organizations to contribute towards charitable causes while also providing them with tax benefits. Individuals can claim tax deductions on these donations while filing their income tax returns, contributing to both philanthropy and financial savings. Section 80 GGC: Deduction in respect of contributions given by any person to political parties As per this section, 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 an electoral trust. Provided that no deduction shall be allowed under this section in respect of any sum contributed by way of cash. For the purpose of this section, “political party” means a political party registered under section 29A of the Representation of the People Act, 1951 (43 of 1951). What to do you in case you have received summon for Donations made to a Political Party?

• Reply online on the Income Tax Portal with proof of the donation made to the Political Party.
• File ITR-U reversing the donation claim, in case the claim has been taken wrongly in the Income Tax Return.