The Congress has alleged a ₹10,000 crore tax evasion racket involving 3,260 registered unrecognised political parties (RUPPs) and demanded a joint parliamentary committee (JPC) probe into what it called a major political donation scam.
Senior Congress leader and former member of Parliament (MP) Shaktisinh Gohil alleged that the parties were being used as conduits to convert unaccounted money into ostensibly legitimate political donations, enabling individuals and companies to claim tax benefits before allegedly receiving much of the money back in cash.
According to Mr Gohil, the alleged arrangement involved donors contributing money to RUPPs to claim deductions available under the Income Tax (I-T) Act for eligible political contributions. The political parties or their associates, he alleged, would retain commissions of between 2% and 15% and return the balance to the donors in cash.
“More than ₹10,000 crore of black money has been generated through these fake political parties and there has been an open loot of tax revenue,” Mr Gohil alleged.
The Congress leader said the issue warranted a comprehensive investigation to establish the identities of the parties, donors, intermediaries and professionals involved and determine the extent of tax evasion.
Congress Questions Govt Inaction
Mr Gohil claimed that irregularities involving such political parties had come to light earlier, including through a report released in 2025, but alleged that the government had failed to pursue the matter with the seriousness it deserved.
He also claimed that tax authorities and tribunals had detected cases involving allegedly fraudulent claims, but questioned why criminal proceedings and penalties had not followed.
Mr Gohil said the I-T Act contains provisions for stringent action where taxpayers deliberately conceal income or furnish false information. He referred to Sections 276C(1) and 277 which provide for prosecution in specified cases of wilful tax evasion and false statements.
The Congress party also demanded that the maximum penalties available under the law be imposed wherever violations are established.
Mr Gohil sought criminal proceedings against people operating the alleged bogus political parties, donors who knowingly participated in fraudulent transactions and chartered accountants found to have facilitated wrongdoing. He also called for the cancellation of professional licences in cases where chartered accountants are found guilty.
The party further demanded that details of donations received by such parties and the individuals and companies behind them be made public.
Alleged Cash-back Mechanism
The central allegation made by the Congress party is that the tax benefit available for political donations was allegedly being exploited through a cash-back mechanism.
Mr Gohil said individuals and companies could use donations to eligible political parties to reduce their tax liability, while the alleged arrangement with RUPPs allowed donors to recover most of the amount in cash after commissions were deducted.
He pointed to the high effective tax burden faced by individuals in the highest income brackets as one of the incentives that could potentially drive such arrangements.
The Congress leader alleged that the scale of the purported operation made it necessary to examine not only the political parties but also the donors, intermediaries and professionals who may have facilitated the transactions.
The party said the investigation should establish whether the donations were genuine, whether the parties actually carried out legitimate political activity and whether tax deductions were wrongly claimed.
Jairam Ramesh Targets BJP
Congress general secretary in charge of communications, Jairam Ramesh, also stepped up the political attack, asking who was behind the alleged network of 3,260 RUPPs.
In
a post on X, Mr Ramesh questioned who the 'Chanakya' behind the alleged 'sham political parties' was and who the 'true mastermind' of the alleged scam was.
He alleged that the parties were operating under the patronage of the Bharatiya Janata Party (BJP) and questioned why the government had not initiated a probe despite the alleged tax violations coming to light.
Mr Ramesh also contrasted the alleged inaction with the action faced by the Congress party ahead of the 2024 Lok Sabha election, when its bank accounts were frozen and the party received tax notices.
He asked why the authorities had not similarly investigated the 3,260 parties and the alleged tax evasion associated with them.
Election Commission's Role Questioned
The Congress party also questioned the election commission of India's (ECI's) handling of political funding disclosures.
Mr Gohil referred to transparency and accountability guidelines issued by the poll panel in 2014, arguing that political parties are required to maintain and disclose information relating to donations and expenditure, with relevant details being shared with the I-T department.
He alleged that these mechanisms had not been adequately enforced in the cases under discussion.
The Congress party has sought scrutiny not only of the tax treatment of the donations but also of the electoral and regulatory compliance of the RUPPs.
Mr Gohil demanded that the government make public information about the donations received by the alleged bogus parties, the donors involved and the individuals associated with them. He also sought details of people allegedly linked to these parties who subsequently joined the BJP or became office-bearers.
Demand for JPC Investigation
According to the Congress party, a JPC was necessary because the allegations involved multiple institutions and potentially large-scale transactions.
Apart from the parliamentary probe, the party has demanded the recovery of wrongly claimed tax benefits, penalties wherever permitted by law, and criminal prosecution of those found to have deliberately evaded tax or submitted false information.
It has also sought action against chartered accountants found guilty of facilitating fraudulent claims and criminal proceedings against those running political entities found to have been created or used for illicit transactions.
The party's attack comes amid ongoing political debate over electoral funding, tax exemptions for political donations and transparency in political parties' finances.
Mr Gohil accused the BJP-led government of adopting a selective approach towards black money and demanded that the alleged ₹10,000 crore transactions be investigated rather than allowed to remain unresolved.
The Congress party has made the JPC demand the centrepiece of its response, arguing that only a detailed investigation can establish the scale of the alleged tax evasion, identify beneficiaries and determine whether government officials or political actors enabled the purported racket.
Looks like corruption on a massive scale.
Any party that refuses to investigate this must be part of the corruption, so wants to avoid investigation.