The Income Tax Department is probing around 23 political parties in Gujarat over alleged bogus donations totalling more than ₹4,000 crore, with the investigation widening after criminal cases were registered against several Registered Unrecognised Political Parties (RUPPs).
The latest cases relate to alleged donations routed through political parties to enable taxpayers to claim tax deductions, with investigators alleging that a substantial portion of the money was subsequently returned to donors through cash transactions.
The Gujarat CID (Crime) has so far registered cases against the Bharatiya National Janata Dal (BNJD), Garib Kalyan Party (GKP) and Swatantrata Abhivyakti Party (SAP), while a fourth case has also been reported against the Satyavadi Rakshak Party. The cases are based on complaints from the Income Tax Department.
₹2,283 Crore Donation Trail Under Investigation
According to the investigation details provided, the four parties are alleged to have received bogus donations worth around ₹2,283 crore and evaded taxes exceeding ₹800 crore.
In the three FIRs, BNJD allegedly received ₹1,143.85 crore from 56,238 donors, while SAP allegedly received ₹519 crore and GKP ₹206.76 crore. The combined figure in those three cases is about ₹1,869.61 crore, with an alleged loss of around ₹560 crore to the government exchequer.
The Income Tax complaints allege that taxpayers transferred money to the political parties through banking channels and received donation receipts. The funds were then allegedly moved through shell or bogus firms, with commissions deducted before the remaining amount was returned to the donors in cash.
Investigators have also alleged that false contribution reports, audit documents and other financial records were prepared and submitted to the Election Commission.
Cases Against More Political Parties Likely
The probe is now being expanded to another seven to eight political parties. Investigators have reportedly identified another ₹1,200 crore to ₹1,500 crore in alleged bogus donations routed through these outfits.
Proceedings have been initiated for registering cases against the additional parties, while investigators are also examining the role of donors, intermediaries and chartered accountants allegedly involved in the transactions.
The Income Tax Department’s wider action followed intelligence that some political parties may have been used to exploit tax exemptions available for political contributions.
Searches were conducted at the offices of more than 50 political parties as well as premises linked to party functionaries and chartered accountants.
How The Alleged Donation Network Worked
The Income Tax complaints allege that donors transferred money to the political parties and obtained receipts that enabled them to claim deductions under the Income Tax Act.
The money was subsequently allegedly routed through multiple entities before being withdrawn and returned to the original donors after commissions were deducted.
In the BNJD case, for instance, the Income Tax Department has alleged that ₹1,143.85 crore was received from 56,238 donors, with the alleged tax loss estimated at around ₹343 crore. The complaint also alleges that money was transferred to firms and withdrawn in cash after commissions ranging from two to 10 per cent.
The investigation has also raised questions over the role of chartered accountants who allegedly signed or digitally submitted audit reports without properly verifying the parties’ accounts.
Political Parties On The Income Tax Department’s Radar
The parties identified in the wider probe include:
- Bharatiya National Janata Dal
- Garib Kalyan Party
- Swatantrata Abhivyakti Party
- Lokshahi Satta Party
- Garvi Gujarat Party
- Indian Swarna Samaj Party
- Jan Man Party
- Gujarat Janata Panchayat Party
- Satyavadi Rakshak Party
- New India United Party
- Rashtriya Jankranti Party
- Zilla Vikas Mandal
- Lok Kalyan Manch
- Bharatiya Loktantrik Party
- Gujarat Sangharsh Sangathan
- Janata Raj Party
- Rashtriya Samajwadi Party
- Akhil Bharatiya Yuva Vikas Party
- Manav Adhikar National Party
- Hindustan Nirman Dal
- Swarajya Navnirman Sena
- Jan Seva Party
Several of these parties are Registered Unrecognised Political Parties, a category that has come under scrutiny in Gujarat over unusually large donations compared with their electoral footprint. Recent reporting based on Election Commission and Association for Democratic Reforms data found that six Gujarat-based RUPPs received about ₹1,700 crore in donations in 2023-24.
The allegations in the ongoing cases have not yet been tested in court. The investigation is continuing, including into the alleged role of donors, intermediaries, political party office-bearers and professionals who handled the parties’ accounts.
