Assessee receiving message for 80GGC donation for AY 2022-23 from Income tax department

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Income Tax department has started sending messages to the taxpayers who have claimed donation under section 80GGC i.e. political donations in AY 2022-23.

The message being received is as under:

Dear Taxpayer, ABC (ARXXMXXXXR)
It is observed that you have claimed deduction under section 80GGC of Rs 100000 in your ITR for A.Y. 2023-24. It is requested that the claim may be verified and mistake, if any, may be rectified by updating the ITR for A.Y. 2023-24 by 31.03.2025.

Warm regards
Income Tax Department

Considering the above message it can be said that like assessment notices were issued to more 5000 people for claiming deduction under section 80GGC for AY 2019-20 wherein income tax department had reopened a cases and in mostly all the cases department has made addition to the income of assessee.

Similarly, department is now sending messages to assessee who have claimed deduction u/s 80GGC of the Act for AY 2022-23 and AY 2023-24.

Now, the people are confused as to what action needs to be taken?

Currently, we need to understand that this is just an intimation to assessee and not an assessment. Hence, this is not a notice which needs to be replied.

Now, let’s understand the 2 options available:

Option 1:

If the assessment has been done in case of assessee for earlier years wherein assessee has made donation to the same party or even if the assessment was not done or if donation was not done in earlier years and if the name of the political party is mentioned in the list of Registered Unrecognised Political Parties or if the assessee does want to face assessment in future then the assessee can opt for filing updated return, wherein assessee would be required to pay addition tax on disallowance of such deduction of donation to political party along with additional tax in form of penalty at the rate of 25% or 50% whichever is applicable.

For AY 2022-23 last date to file updated return with 50% penalty is 31.03.2025 and last date to file updated return with 25% penalty is 31.03.2025.

List of registered unrecognised political party can be read as under:.

Option 2:

Second option would be to wait for assessment notice and it could come if donation is made to existing RUPP party of the list mentioned above as department might be having list of all donors or if they do search on some other party. If the case is selected for assessment, there would be a confirmed addition of the deduction claimed and a penalty will be levied of around 200% of tax amount.

Hence, it is advisable to identify the cases where there is potential of selection of case for bogus donation, and to file updated return at earliest.

Guidance on above article on Income Tax by:

Naman Maloo (C.A., B.Com)
He is currently working as Partner – Direct Tax with a renowned firm in Jaipur having experience in dealing Assessments before Income Tax authority, Tax Audit, International Taxation, Tax planning for NRI, Business planning and consultation.
E-mail: naman.maloo@jainshrimal.in | LinkedIn: Naman Maloo

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