Income Tax Warning for 80GGC Claims – What It Means & What You Must Do!
Priya Kumari • June 28th, 2025 • 5 min read • 👁️ 80 views • 💬 0 comments
“Honest tax reporting is not just a duty — it’s your shield against future scrutiny.”
— Income Tax Wisdom for the Digital Age
Many salaried individuals have recently received SMS or emails from the Income Tax Department regarding suspicious donations claimed under Section 80GGC. Here’s a clear guide to understand, verify, and take action to avoid penalties.
🧾 What is Section 80GGC?
Deduction for Contributions to Political Parties
- Available to any person (except local authorities and govt-funded bodies)
- Contribution must be made via non-cash modes (No deduction allowed for cash donations)
- Donations must be made to political parties registered under Section 29A of the Representation of the People Act, 1951
❗ Why Are Notices Being Issued for 80GGC Claims?
| ⚠️ Reason | 📌 Explanation |
|---|---|
| Mismatch with AIS/TIS | The deduction is not reflecting in your Annual Information Statement (AIS) |
| Suspicious Donations | Small UPI donations in bulk or donations to unknown political parties |
| Fake or No Documentation | No valid receipts or payment proofs from the party or trust |
🛠️ Scenarios & What You Should Do
✅ Scenario 1: Claimed Deduction by Mistake (No Real Donation)
🔧 Solution:
- Don’t ignore the notice
- Revise your ITR immediately
- Pay additional tax + interest
- Return the refund received if it was inflated
❌ Scenario 2: Fake Donation for Tax Evasion
Example: Donated ₹1,00,000 to a political party, got 80GGC deduction, and received the money back minus 10–20% commission.
⚠️ Consequences:
- This is tax evasion
- Department may impose 200% penalty
- Risk of Section 276C prosecution (jail + fine)
🛠️ Solution:
- File Revised ITR or ITR-U urgently
- Pay tax, interest, and return refund
🧾 Scenario 3: Genuine Donation
👍 You’re safe, but ensure you have:
- Donation Receipt (with party name, PAN, date, mode, amount)
- Proof of Payment (UPI, bank statement, cheque copy)
- Party Registration Proof (under Section 29A)
🔄 Understanding Consequences of Non-Compliance
🎯 Flowchart: Taxpayer's Mistake → Consequences
| Section | Description | Penalty/Outcome |
|---|---|---|
| 148 | Income Escaping Assessment | New reassessment up to 10 years |
| 270A | Underreporting/Misreporting Income | 50%–200% of tax penalty |
| 276C | Willful Tax Evasion | Jail (3 months–7 years) + Fine |
🔁 Ways to Revise Your ITR
🗓️ Deadline to File Revised ITR
| FY | AY | Last Date to File Revised ITR |
|---|---|---|
| 2024–25 | 2025–26 | 31st December 2025 |
📘 For Older Years: File ITR-U (Updated Return)
As per CBDT Notification No. 49/2025 dated 19th May 2025, you can now file Updated Returns (ITR-U) within 4 years from the end of the relevant Assessment Year (AY).
| FY | AY | Last Date to File ITR-U |
|---|---|---|
| 2020-21 | 2021-22 | 31st March 2026 ✅ |
| 2021–22 | 2022–23 | 31st March 2027 ✅ |
| 2022–23 | 2023–24 | 31st March 2028 ✅ |
| 2023–24 | 2024–25 | 31st March 2029 ✅ |
ITR-U can be filed only once for a particular financial year.
Once an Updated Return (ITR-U) is filed for a specific year, a second ITR-U for the same year is not permitted under any circumstances.
Additional Tax on ITR-U
| Time of Filing ITR-U | Additional Tax Payable |
|---|---|
| Within 12 months | 25% of tax + interest |
| 12–24 months | 50% of tax + interest |
| 24-36 Months | 60% of tax + interest |
| 36-48 Months | 70% of tax + interest |
You Cannot File ITR-U in the Following Situations:
-
To Claim or Increase TDS Refund:
ITR-U cannot be filed to claim a refund or increase a previously claimed refund. -
To Report a Loss or Carry Forward Losses:
You cannot use ITR-U to declare a loss (e.g., business loss, capital loss) or carry forward such losses, including unabsorbed depreciation. -
To Reduce Tax Liability or Income:
ITR-U is not permitted if the intention is to reduce the total tax liability or decrease the income declared in the original ITR. -
If Assessment or Reassessment Has Started:
If the Income Tax Department has already initiated any assessment, reassessment, or audit for the relevant year, ITR-U filing is not allowed. -
If There Has Been a Search or Survey:
You cannot file ITR-U if a search (Section 132) or survey (Section 133A) has been conducted for that financial year. -
If ITR-U Has Already Been Filed Once for That Year:
You can file ITR-U only once per assessment year. A second updated return is not allowed.
Other Charges:
- Interest under Section 234A/B/C
- Late Fee under 234F (if original ITR not filed)
- No refunds or loss adjustments allowed.
🚫 Important Advisory
✅ Only claim 80GGC if:
- You actually donated
- You have receipt + payment proof
- Political party is registered under Section 29A
❌ Avoid:
- Agents/platforms offering cashbacks on political donations
- UPI-based split transactions to unknown parties
💡 Pro Tip:
Before claiming any donation deduction under 80G or 80GGC:
- Check if the entity is valid and registered
- Ensure it reflects in AIS or have proof
- When in doubt, consult your CA or tax expert
🛑 If you've made a wrong claim, ACT FAST, REVISE YOUR RETURN, and AVOID PENALTY!
Need help understanding your tax reports or filing return?
👉 Contact us for a personalized consultation and revising your returns.
