A nationwide campaign by the income tax department targeting fraudulent claims under section 80GGC—related to political donations—has resulted in significant financial corrections.
Conducted in three phases, the initiative led to the recovery of ₹404 crore in additional taxes and the reversal of ₹949 crore in ineligible deductions, amounting to a total correction of ₹1,353 crore.
The “nudge” campaign, which covered assessment years 2022–23, 2023–24, and 2024–25, prompted over 35,000 taxpayers to revise their income tax returns. These revisions primarily involved voluntary disclosures of previously unreported income and the withdrawal of ineligible deductions.
Sources within the income tax department noted a surge in last-minute compliance, suggesting a strong behavioural response to the department’s enforcement efforts.
Updated returns resulted in two key outcomes: Payments of additional tax under section 140B and reductions in deductions claimed under chapter VI-A—especially those related to political donations. By the time phase 3 ended on March 31, authorities had collected ₹404 crore in additional tax and reversed ₹949 crore worth of questionable deductions.
The highest number of corrections occurred for assessment years 2022–23 and 2023–24, indicating recent—and potentially deliberate—misuse of political donation provisions. Investigations uncovered a pattern of inflated claims under Section 80GGC, primarily by salaried professionals and business owners in the IT sector.
Hyderabad emerged as a key hotspot, with at least 400 tech employees issued notices for claiming unusually high donations to political parties, including registered but unrecognised outfits. Many of these claims ran into several lakhs of rupees.
In fact, Hyderabad is among the top cities flagged, alongside Mumbai, Delhi, and Bengaluru. After the Mumbai zone, the Telangana-Karnataka region reported the second highest volume of such deductions.
Of the ₹7,124 crore claimed nationwide under section 80GGC, ₹1,641 crore originated from the Telangana-Karnataka zone. In Telangana alone, nearly 15,223 employees are now under scrutiny for potentially fraudulent claims.
Source #TOI
