Patna: The Income Tax Department is investigating an alleged large-scale tax evasion scheme in which donations made to certain unrecognised political parties were allegedly used to help donors claim income tax benefits while receiving most of the donated money back through unofficial channels.
According to sources familiar with the investigation, donors allegedly transferred funds to the bank accounts of some unrecognised political parties through legitimate banking channels. A substantial portion of the amount—reportedly up to 90%—was later returned to the donors in cash or through other intermediary transactions, while the remaining amount was allegedly retained as commission.
Despite receiving most of the money back, donors are suspected of claiming tax deductions on the full donation amount under Section 80GGC of the Income Tax Act, which allows tax deductions for contributions made to eligible political parties.
Investigators estimate that the suspected transactions under scrutiny could involve nearly Rs 6,000 crore.
The investigation has reportedly identified suspicious activities linked to two unrecognised political parties registered in Bihar. As part of the probe, the Income Tax Department is said to have recently conducted searches at multiple locations, including Delhi, Surat and Ahmedabad.
According to sources, the alleged modus operandi involved a donor or company contributing Rs 10 lakh to a political party’s bank account. Approximately Rs 9 lakh was then allegedly returned through intermediaries or other channels, while the remaining amount was retained as commission. The donor would subsequently claim tax benefits on the entire Rs 10 lakh donation.
However, the Income Tax Department has not issued any official statement confirming the allegations or the estimated value of the suspected transactions.
Sources in the department said the investigation began around 18 months ago after officials noticed unusual discrepancies between tax refund claims and tax collection data. The probe is now examining the possible involvement of additional individuals, companies and organisations.
Officials indicated that further legal action, if any, will depend on the findings and evidence gathered during the course of the investigation.
Note: The allegations are based on information emerging from the ongoing Income Tax Department investigation. No findings of wrongdoing have been established by a court of law, and the investigation remains in progress.
