Why is the tax department messaging political donors?

Taxpayers claiming political donations face scrutiny as I-T authorities seek to verify claims

- Sashind Ningthoukhongjam

Many taxpayers who reported making donations to political parties and claimed deductions under Section 80GGC have started receiving messages from the Income Tax department urging them to verify their claims.

"This appears to be a soft nudge from the tax department, likely targeting taxpayers who may have claimed deductions for fake donations or made errors in their filings," said Nitesh Buddhadev, a chartered accountant and founder of Nimit Consultancy. "The message provides an opportunity to rectify any mistakes before stricter action is taken."

Donations to political parties are prone to misuse. Unlike donations to charitable trusts under Section 80G, where the trust is required to file Form 10BD and disclose details of donors and the amount donated, there is no form, reporting mechanism, or transparency requirement under the Income Tax Act, 1961 for donations to political parties, making it easier for taxpayers to claim fraudulent deductions.