Why is the I-T department sending SMSes to political donors?

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Subscribe to enjoy similar stories. Several 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 decidedly prone to misuse. Unlike donations to charitable trusts under Section 80G, in which the trust is required to file Form 10BD and disclose the details of the donors and the amounts donated, there is no such form or reporting mechanism under the Income Tax Act, 1961 for donations to political parties. Also read | Banking beyond borders: Can US citizens open accounts in India? “This can be misused as the taxpayer simply needs to provide details such as the name of the political party, the donation amount, and the cheque or transaction number in his/her income tax return," said Laxmi Ahirwar, a chartered accountant and Director, P.

R. Bhuta & Co. She added, “Under Section 29C of The Representation of the People Act, 1951, political parties are indeed required to file a contribution report to the Election Commission of India providing details of the contributions received over ₹20,000.

However, the extent of compliance with this remains unclear." Picture this. Mr A “donates" ₹10 lakh to a political party and claims a deduction. Let’s say he falls under the 30% tax bracket and saves ₹3 lakh of tax by