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Major Scam by Three Political Parties in Gujarat Exposed! Fake Donations Worth ?1,870 Crore Cost the Government ?560 Crore in Lost Revenue
Gandhinagar: Three unrecognised registered political parties in Gujarat have allegedly misused income tax exemption rules to declare fake donations amounting to approximately ?1,870 crore. It is alleged that this resulted in tax evasion worth ?560 crore from the state exchequer. Acting on a complaint from the Income Tax Department, the Gujarat Police CID has registered three separate cases regarding this matter, and an investigation is underway.
These three parties have been contesting elections in Gujarat since 2017, yet every single one of their candidates has forfeited their security deposit. Despite this, they reported receiving massive donations.
The three parties and their respective shares:
Bharatiya National Janata Dal (BNJD): Involved in the largest scam. Declared fake donations worth ?1,143.85 crore from 56,238 donors, resulting in tax evasion of ?343 crore.
Freedom Expression Party (SAP): Declared donations worth ?519 crore; evaded ?155 crore in taxes.
Garib Kalyan Party (GKP): Declared donations worth ?206.76 crore; evaded ?62 crore in taxes. Additionally, credit transactions exceeding ?1,295 crore were detected in the accounts of associated companies.
How was the scam perpetrated?
Under Section 80GGC of the Income Tax Act, donations made to political parties qualify for a 100% tax exemption. Exploiting this provision, donors deposited funds into the parties' accounts via cheque or RTGS.
Immediately upon deposit, the funds were transferred to entities such as ‘Jai Ram Enterprises’, ‘Kisan Enterprises’, and ‘K.J. Funds were diverted to shell companies—often referred to as ‘trading’ companies. Subsequently, fabricated invoices were generated, and the money was withdrawn in cash. After deducting a commission of 4 to 10 percent, the remaining amount was returned to the original donors as ‘cashback.’ This arrangement allowed donors to claim tax benefits while recovering their black money in cash.
Furthermore, Chartered Accountants (CAs) prepared and uploaded fraudulent audit reports and donation statements to the government portal without conducting any verification, in exchange for a bribe of just ?50,000.
This entire racket was exposed following an investigation by the Income Tax Department that spanned over a year. A police inquiry is now underway.
Gandhinagar: Three unrecognised registered political parties in Gujarat have allegedly misused income tax exemption rules to declare fake donations amounting to approximately ?1,870 crore. It is alleged that this resulted in tax evasion worth ?560 crore from the state exchequer. Acting on a complaint from the Income Tax Department, the Gujarat Police CID has registered three separate cases regarding this matter, and an investigation is underway.
These three parties have been contesting elections in Gujarat since 2017, yet every single one of their candidates has forfeited their security deposit. Despite this, they reported receiving massive donations.
The three parties and their respective shares:
Bharatiya National Janata Dal (BNJD): Involved in the largest scam. Declared fake donations worth ?1,143.85 crore from 56,238 donors, resulting in tax evasion of ?343 crore.
Freedom Expression Party (SAP): Declared donations worth ?519 crore; evaded ?155 crore in taxes.
Garib Kalyan Party (GKP): Declared donations worth ?206.76 crore; evaded ?62 crore in taxes. Additionally, credit transactions exceeding ?1,295 crore were detected in the accounts of associated companies.
How was the scam perpetrated?
Under Section 80GGC of the Income Tax Act, donations made to political parties qualify for a 100% tax exemption. Exploiting this provision, donors deposited funds into the parties' accounts via cheque or RTGS.
Immediately upon deposit, the funds were transferred to entities such as ‘Jai Ram Enterprises’, ‘Kisan Enterprises’, and ‘K.J. Funds were diverted to shell companies—often referred to as ‘trading’ companies. Subsequently, fabricated invoices were generated, and the money was withdrawn in cash. After deducting a commission of 4 to 10 percent, the remaining amount was returned to the original donors as ‘cashback.’ This arrangement allowed donors to claim tax benefits while recovering their black money in cash.
Furthermore, Chartered Accountants (CAs) prepared and uploaded fraudulent audit reports and donation statements to the government portal without conducting any verification, in exchange for a bribe of just ?50,000.
This entire racket was exposed following an investigation by the Income Tax Department that spanned over a year. A police inquiry is now underway.
These three parties have been contesting elections in Gujarat since 2017, yet every single one of their candidates has forfeited their security deposit. Despite this, they reported receiving massive donations.
The three parties and their respective shares:
Bharatiya National Janata Dal (BNJD): Involved in the largest scam. Declared fake donations worth ?1,143.85 crore from 56,238 donors, resulting in tax evasion of ?343 crore.
Freedom Expression Party (SAP): Declared donations worth ?519 crore; evaded ?155 crore in taxes.
Garib Kalyan Party (GKP): Declared donations worth ?206.76 crore; evaded ?62 crore in taxes. Additionally, credit transactions exceeding ?1,295 crore were detected in the accounts of associated companies.
How was the scam perpetrated?
Under Section 80GGC of the Income Tax Act, donations made to political parties qualify for a 100% tax exemption. Exploiting this provision, donors deposited funds into the parties' accounts via cheque or RTGS.
Immediately upon deposit, the funds were transferred to entities such as ‘Jai Ram Enterprises’, ‘Kisan Enterprises’, and ‘K.J. Funds were diverted to shell companies—often referred to as ‘trading’ companies. Subsequently, fabricated invoices were generated, and the money was withdrawn in cash. After deducting a commission of 4 to 10 percent, the remaining amount was returned to the original donors as ‘cashback.’ This arrangement allowed donors to claim tax benefits while recovering their black money in cash.
Furthermore, Chartered Accountants (CAs) prepared and uploaded fraudulent audit reports and donation statements to the government portal without conducting any verification, in exchange for a bribe of just ?50,000.
This entire racket was exposed following an investigation by the Income Tax Department that spanned over a year. A police inquiry is now underway.
