Have you claimed tax exemption for political donations?
If a person has claimed exemption for a political party in his income tax return, then the tax department has issued a warning to such taxpayers. The Income Tax Department has started sending verification messages to the Income Tax Department for political donations under section 80 GGC of the Income Tax Act. Its campaign aims to curb fake claims of taxpayers. According to sources, the Income Tax Department fears that some taxpayers may try to save tax by showing fake donations.
What is the section 80GGC of the Income Tax Act and how it is misused?
Section 80GGC of the Income Tax Act allows taxpayers for 100 % discount on donations given to political parties. However, this donation should be given through check, bank, transfer or digital payment. Discounts on donations given in the form of cash cannot be claimed. Actually, there are many people who actually support political parties by donating them. However, there are many taxpayers who do not donate any political party, but only refer to it in a fake way in the return. The Income Tax Department has been keeping a close watch on such activities for the last few years. For example, in 2024, the Income Tax Department has sent notice to taxpayers who have donated non-recognized political parties.
We are telling you here how this tax saving scam works in ITR?
-A taxpayer made a fake claim to give Rs 5 lakh to a political party.
If the person is under the tax of 30 %, then through this he will be successful in saving the tax of Rs 1.5 lakh.
-It was never paid and the amount was returned to the cash.
Now the tax department has taken strict measures to prevent these disturbances.
If you have received a verification message, what to do
Income tax department has two clear expectations from those who claim such discounts:
– If the claim is rejected, the taxpayer should present concrete documents related to donations.
– If the claim is incorrect, the taxpayer may file updated returns to pay the outstanding tax including interest within two years of the assessment year to rectify the mistake.
If the taxpayer does not file updated returns in the case of fake claim, then taxpayers will have to pay 200 % of the tax amount as a fine and the rest can be taken.
Not getting information from political parties, a disturbance?
At present, there is no such provision under the Income Tax Act that political parties should upload details of those who donate. It is necessary for political parties to inform the Election Commission about the big few, but at this level there is no clarity about the provisions related to the Compliance.
Follow income tax rules
Those who have actually donated through banking channels do not need to worry. However, if the exemption is wrongly claimed, it is a better option to fix it by the tax department before the action of the tax department, so that taxpayers can avoid heavy penalty. In this case, taxpayers can contact their chartered accountants for better advice.
Before claiming any wrong exemption, taxpayers should remember that the Income Tax Department is keeping a strict watch on such activities and the days of claiming fake exemption through political donations have been laughed.