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Income Tax Department Sends Mass Mail to Taxpayers Over Donation Claims in ITR (AY 2022-23 to 2024-25)

The Income Tax Department has initiated a nationwide crackdown on taxpayers who claimed deductions under Section 80GGC for political donations in their Income Tax Returns (ITR) for Assessment Years (AY) 2022-23, 2023-24, and 2024-25. Thousands of taxpayers have received emails urging them to verify their claims and rectify discrepancies by March 31, 2025, or face penalties. This move follows heightened scrutiny of bogus donations linked to Registered Unrecognised Political Parties (RUPPs) and mirrors actions taken in previous years, such as AY 2019-20, where deductions worth crores were disallowed.

Also Read-How to Check Fake Summons from CBIC Site: Step-by-Step Guide to Verification

Why Is the Income Tax Department Targeting Donation Claims?

The department’s latest campaign focuses on curbing fraudulent tax benefits claimed under Section 80GGC, which allows 100% deductions for donations to political parties. Investigations reveal that many taxpayers inflated donations or contributed to RUPPs suspected of laundering funds. For instance, in AY 2019-20, over 5,000 cases were reopened, leading to disallowances and penalties.

Key Triggers for Scrutiny.

  1. Mismatched Documentation: Donations without valid receipts, bank statements, or Form 10BE (donation certificates).
  2. Suspicious Proportions: Claims exceeding 50-80% of the taxpayer’s declared income.
  3. RUPP Links: Donations to parties like Bhartiya Rashtriya Tantra Party or Navsarjan Bharat Party, which lack electoral credibility.

What Does the Income Tax Department’s Email Say?

The email template reads:

“Dear Taxpayer,
It is observed that you have claimed a deduction under Section 80GGC of ₹XXXXX in your ITR for A.Y. 2023-24. Verify the claim and rectify errors by filing an Updated Return (ITR-U) by 31.03.2025.”

Two Critical Options for Taxpayers.

  1. Genuine Claims: Retain donation receipts, bank statements, and Form 10BE for future scrutiny.
  2. Bogus Claims: File ITR-U immediately to avoid penalties. Delays could lead to a 200% penalty if the case enters assessment.

Penalties for Incorrect Claims: ITR-U vs. Assessment.

ScenarioAdditional TaxPenaltyDeadline
File ITR-U within 12 months25%Avoids higher penaltiesMarch 31, 2025
File ITR-U within 24 months50%Reduces litigation riskMarch 31, 2025
Case Selected for Assessment100% tax due200% penalty + Income additionNo fixed deadline

Source: Income Tax Portal

Lessons from Past Cases: AY 2019-20 Crackdown.

In AY 2019-20, taxpayers who donated to RUPPs faced:

  • Disallowed Deductions: Full donation amounts added to taxable income.
  • Penalties: 50-200% of tax due, depending on intent 38.
    For example, a taxpayer claiming ₹10 lakh in donations saw their taxable income rise by ₹10 lakh, with penalties up to ₹6 lakh (200% of tax due).

Expert Recommendations.

  1. Self-Audit: Cross-check donations against Form 26AS and Form 10BE.
  2. Act Promptly: File ITR-U before March 31, 2025, to cap penalties at 50%.
  3. Legal Defense: If scrutinized, use precedents like CIT v. Shree G. Selva Kumari to challenge disallowances lacking evidence.

FAQ Section

Q1. What if my donation was genuine but lacks documentation?
A: Without receipts or Form 10BE, the claim may be disallowed. Reconstruct records or seek legal advice.

Q2. Can donations to unrecognized parties still qualify?
A: Yes, but only if the party is registered under Section 29A of the Representation of the People Act, 1951 14.

Q3. What’s the last date to file ITR-U for AY 2022-23?
A: March 31, 2025, for both 25% and 50% penalty brackets 4.


Conclusion
The Income Tax Department’s mass emails signal a zero-tolerance approach toward fraudulent deductions. Taxpayers must act swiftly to verify claims, secure documentation, or file ITR-U. With penalties soaring up to 200% in assessment cases, compliance is no longer optional—it’s a financial safeguard.

Stay informed with updates from the Income Tax Department or consult a tax expert for personalized guidance.


This article synthesizes information from official notices, expert analyses, and judicial rulings to provide actionable insights. Always verify details with a certified tax professional.


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Hello, I am C.K. Gupta Founder of Taxgst.in, a seasoned finance professional with a Master of Commerce degree and over 20 years of experience in accounting and finance. My extensive career has been dedicated to mastering the intricacies of financial management, tax consultancy, and strategic planning. Throughout my professional journey, I have honed my skills in financial analysis, tax planning, and compliance, ensuring that all practices adhere to the latest financial regulations. My expertise also extends to auditing, where I focus on maintaining accuracy and integrity in financial reporting. I am passionate about using my knowledge to provide insightful and reliable financial advice, helping businesses optimize their financial strategies and achieve their economic goals. At Taxgst.in, I aim to share valuable insights that assist our readers in navigating the complex world of taxes and finance with ease.

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