Taxpayers who claimed deductions under Section 80GGC of Income Tax Act are advised to verify their claims.
The Income Tax Department has launched an SMS campaign to alert taxpayers regarding deductions claimed under Section 80GGC for political donations. This initiative aims to ensure that only legitimate claims are made and to prevent wrongful tax benefits.
Key Highlights of the Income Tax Department’s Warning
- Taxpayers who claimed deductions under Section 80GGC are advised to verify their claims.
- If discrepancies are found, an Updated ITR (ITR-U) must be filed by March 31, 2025, for Assessment Years (AY) 2022-23 and 2023-24.
- This warning primarily targets taxpayers who may have falsely claimed political donation deductions.
- If you have genuinely donated to a registered political party, you need not worry.
Why Are Taxpayers Receiving This SMS?
The tax department is sending cautionary messages to taxpayers who have claimed deductions under Section 80GGC. This section allows a 100% tax deduction for donations made to political parties or electoral trusts. However, some taxpayers may have incorrectly claimed this deduction, leading to an audit or assessment.
What Should You Do If You Receive This SMS?
- Verify Your Deduction: Ensure that your claim is accurate and supported by valid documents.
- File ITR-U If Necessary: If you mistakenly claimed the deduction, update your ITR under Section 139(8A) before March 31, 2025.
- Avoid Penalties: Non-compliance could lead to penalties under Section 270A (for underreporting income) or even prosecution under Section 276C (for tax evasion).
Understanding ITR-U Filing and Penalty Structure
Filing an Updated ITR (ITR-U) helps rectify errors in previously filed returns. Here’s how the penalty structure works:
- If filed within one year from the end of the relevant AY: 25% additional tax on unreported income.
- If filed after one year but before two years: 50% additional tax on unreported income.
Documents Required to Support Political Donation Claims
To validate your political donation deduction under Section 80GGC, maintain the following documents:
- Donation Receipt: Must include:
- Name of the political party or electoral trust
- PAN of the recipient
- Mode and amount of donation
- Date of donation
- Proof of Payment:
- Bank statements reflecting the transaction
- Copies of cheques or UPI confirmations (if applicable)
- Party Registration Proof:
- Ensure the political party is registered under Section 29A of the Representation of the People Act, 1951.
Also Read: Key Updates on Tax & Corporate Law: 29 January 2025
Why You Should Take This Warning Seriously
Failure to comply with tax regulations may result in:
- Assessment proceedings under Section 148 for undisclosed income.
- Financial penalties and interest on unpaid taxes.
- Possible legal action for tax evasion.
Final Thoughts
If you have genuinely donated to a political party and have proper documentation, there is no need to worry. However, if you suspect an incorrect claim, take corrective action by filing an ITR-U before March 31, 2025 to avoid penalties.
Stay compliant, verify your deductions, and ensure your tax records are in order to prevent unnecessary legal trouble.
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