Taxpayers who have donated more than Rs. 5L to political parties under strict Income Tax surveillance

Thousands of people who have contributed at least Rs. 5 lakh to obscure political organizations have received a lengthy list of inquiries from the Income Tax authorities. The specific questions stem from the fiscal year 2020–21, when it was reported that many donors sent checks only to receive their money back in cash from the party. This acted as a money laundering machine and collected a 1-3% commission fee for the service.

Donors can reduce their tax obligation by claiming a full deduction of the amount donated. The amount that can be donated to political parties is unlimited, according to the regulations. During the reviewed year, almost 9,000 people claimed deductions under section 80GGC on donations of at least Rs. 5 lakh. Notably, the I-T Act’s provision 80GGB pertains to businesses that make comparable donations, whereas section 80GGC applies to people.

Details about the recipients in question have been requested, including their name, permanent account number, registration certificates of political parties and electoral trusts, sources of income, account statements of all bank accounts for FY21, and audited financial statements for 2019–20, 2020–21, and 2021–22.