CBDT uncovers ₹9,169 cr bogus political donation racket involving RUPPs, CAs and intermediaries
CBDT teams across States and UTs examined 420 bank accounts, 200 case files, and WhatsApp records to piece together the laundering network.
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MURALI KUMAR K
The Central Board of Direct Taxes (CBDT) has unearthed an organised network involving Registered Unrecognised Political Parties (RUPPs), Chartered Accountants and intermediaries engaged in laundering money worth ₹9,169 crore that was being passed off as political donations to evade taxes.
According to sources privy to the CBDT’s co-ordinated action, excess tax deductions of ₹9,169 crore were claimed over two assessment years — 2022–23 and 2023–24 — compared to legally declared political receipts. Of this, ₹6,116 crore pertained to AY2022–23 and ₹3,053 crore to AY2023–24. The investigations follow a businessline expose on RUPPs’ exploitation of loopholes in political donation laws. The Election Commission of India (ECI) has already delisted over 800 RUPPs in just two months — August and September.
Sources said CBDT probe teams across various States and Union Territories examined 420 bank statements and 200 case files, along with a large cache of WhatsApp messages, to piece together the operations of this sophisticated laundering system.
The modus operandi involved the ‘donors’ giving large sums to RUPPs through intermediaries and chartered accountants. The RUPPs, registered under Section 29A of the Representation of the People’s Act, are political entities that fail to achieve State or national party recognition. The monies transferred to them through intermediaries would be claimed as political donations, which are tax-free, on the tax returns. The donors would get cash refunds, while the intermediaries would earn commissions.
Investigations found that 36 RUPPs alone illegally routed ₹5,591 crore, with 60 per cent of the bogus political funding concentrated in 10 such parties, underscoring the urgent need for monitoring and data-sharing reforms.
During questioning, several donors admitted to receiving cash refunds after transferring money to RUPPs, while intermediaries confessed to earning commissions and aggregating receipts as part of the racket.
Fake Receipts and Deductions
The searches yielded a trove of fabricated documents — including fake donation receipts, forged donor lists, and counterfeit bank receipt books — designed to erase audit trails and enable large-scale dummy deductions to go undetected.
Officials said the findings followed the CBDT’s strategy of identifying high-risk taxpayers and nudging them towards compliance through personalised communication campaigns.
Out of 6.24 lakh taxpayers contacted across financial years, 50,842 updated their returns by August 2025, resulting in the withdrawal of ₹1,487 crore in excess deductions and payment of an additional ₹68 crore in tax. Overall, the nudge campaign led to the withdrawal of ₹2,746 crore in total deductions.
Published on November 9, 2025
