The notices were issued under Section 80GGC of the Income Tax Act. 
Special 
The notices were issued under Section 80GGC of the Income Tax Act. The Income Tax department has reportedly sent notices to a number of taxpayers who made donations to political parties that are registered with the Election Commission of India, but not recognised by it. The individuals and corporates were sent notices based on their donations made in FY21 and FY22.
A report in the Economic Times said that the notices have been sent to ascertain whether the donations were made to lesser-known political parties to evade tax and launder money. The notices were issued under Section 80GGC of the Income Tax Act.
Registered political parties are classified as unrecognised if they have not participated in assembly or national elections, or if they have failed to meet the required vote percentage threshold.
A senior official said that so far, 5,000 notices have been sent for FY21 and FY22 for making donations to about 20 registered, but unrecognised, political parties. "We will be sending more notices in the coming days," the official said.
Taxpayers can claim 100% deduction for donations to a registered electoral trust or political party. This is subject to a total deduction not exceeding the individual's total income.
The official added that as per the I-T department records donations did not match declared income. It is suspected these parties may have returned some of the amount in cash. "We have sent notices where donation was not in proportion to income," the official said. In some cases, taxpayers have donated up to 80% of their income to a political party that's not even properly registered.
Earlier in the day, the Supreme Court of India scrapped the electoral bonds scheme that allowed anonymous donations to political parties calling it "unconstitutional". A five-judge Constitution bench of the Supreme Court on Thursday ruled that the electoral bonds scheme violated freedom of speech and expression under Article 19(1)(a) of the Constitution.
The top court emphasised that voters have the right to essential information necessary for casting their votes, and political parties play a crucial role in the electoral process.
Launched in January 2018, electoral bonds are financial instruments that individuals or corporate entities can purchase from a bank and present to a political party, which can subsequently redeem them for funds. The idea was floated in Union Budget 2017 by the then Finance Minister Arun Jaitley.
Chief Justice DY Chandrachud said that when the law permits political contributions, it also indicates the contributors' affiliations, and it is the duty of the constitution to protect them.
The Supreme Court also asked the State Bank of India (SBI) not to submit any more bonds. It also asked the bank to submit details of parties that received electoral bond contributions from the 2019 interim order until the present date.
Earlier news agency PTI reported that the ruling Bharatiya Janata Party (BJP) received a major share of electoral bonds of around 55%, or approximately Rs 6,565 crore. The numbers were taken from a report by the Election Commission and the Association for Democratic Reforms (ADR).
Also read: Electoral bonds: Supreme Court asks State Bank of India to stop issuing them ‘immediately’
Also read: Electoral bonds worth Rs 16,000 cr sold since its inception; BJP gets the lion’s share
Copyright©2025 Living Media India Limited. For reprint rights: Syndications Today
