The Jharkhand Income Tax Department has busted a major tax evasion racket worth nearly Rs. 2,000 crores involving political donations, putting over 500 high earning professionals from Jharkhand and Bihar under the scanner. Officials said the evasion was carried out by routing funds through the Bihar registered Aam Janmat Party, which allegedly returned 95% of the money to donors, retaining only a small commission.
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Modus Operandi Exposed
Political donations qualify for full deduction under Section 80GGC of the Income Tax Act, making them an attractive route for tax planning. According to investigators, donors from Ranchi, Jamshedpur, Dhanbad, and several Bihar districts such as Madhubani, Purnia, Supaul, and Champaran contributed large sums to the party with the sole aim of claiming tax exemption. The party, run by office bearers originally from Gujarat, allegedly funneled the money back through informal channels after taking a 5% cut.
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Raids, Confessions, and Notices
A 50-member Income Tax team carried out raids at multiple locations linked to the party’s office bearers in early August. During questioning, the leaders admitted to their role in the scheme. The party’s chartered accountant also confessed to signing off on balance sheets without conducting statutory audits. The department has started issuing notices to donors, directing them to withdraw the claims and revise their income tax returns.
Legal Action and Broader Impact
Officials confirmed that legal proceedings will soon be initiated against the party functionaries and intermediaries involved. The case has highlighted the misuse of political funding exemptions and the need for strict compliance and auditing of small parties. Tax experts said the scam underscores the risk of using political contributions as a tax shelter and may prompt reforms in the 80GGC exemption framework.
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