New Delhi, July 14, 2025 – The Income Tax Department has unleashed a massive crackdown, raiding over 250 locations across India to dismantle a sprawling network of tax evasion schemes exploiting Section 80GGC of the Income Tax Act. The raids, which began on Monday, target fraudulent political donations, fake medical bills, and tuition fee scams, revealing a web of intermediaries profiting from illegal tax deductions. This operation marks one of the largest efforts to curb tax fraud in recent years, with authorities vowing to hold evaders accountable.

Unprecedented Raids Uncover Tax Fraud Nexus

The Income Tax Department’s sweeping operation spans major cities including Hyderabad, Mumbai, Delhi, Bengaluru, and Chennai, with Hyderabad emerging as a key hub for fraudulent activities. Investigations have zeroed in on individuals and entities orchestrating fake deductions under Section 80GGC, which permits tax exemptions for contributions to registered political parties or electoral trusts. Sources indicate that intermediaries have been charging 5-12% commissions to issue fabricated bills for donations, medical expenses, and tuition fees, enabling taxpayers to slash their tax liabilities illegally.

The raids follow a successful “nudge” campaign by the Income Tax Department, which recovered ₹450 crore in taxes and reversed ₹1,100 crore in ineligible deductions. In Hyderabad alone, IT professionals and small business owners have been flagged for claiming deductions far exceeding their incomes, with some alleging donations to unregistered political entities.

How the Scam Operates

The investigation has exposed a sophisticated racket where intermediaries provide counterfeit bills to taxpayers, often fabricating donations or expenses that never occurred. In some cases, individuals claimed political contributions larger than their annual earnings, triggering scrutiny during tax reconciliations. Unregistered political parties and shell organizations have also been identified as conduits for these fraudulent transactions.

Posts on X have amplified public outrage, with users decrying the misuse of Section 80GGC. “IT raids expose fake donation scams! Time for stricter laws to stop tax cheats,” tweeted @TaxTruthIndia, echoing widespread calls for reform.

Understanding Section 80GGC

Section 80GGC allows taxpayers to claim deductions for donations to registered political parties or electoral trusts, with no upper limit on the amount. While designed to encourage political contributions, this provision has been exploited by unscrupulous taxpayers and intermediaries. The Income Tax Department’s TAXASSIST initiative, launched in July 2025, offers guidance for correcting erroneous claims, urging taxpayers to file revised Income Tax Returns (ITR) or updated ITR-U to avoid penalties.

Impact on Taxpayers and the Road Ahead

The raids signal a zero-tolerance approach to tax evasion, with authorities estimating that over ₹12,000 crore in deductions were claimed under Section 80GGC last year alone. Taxpayers who have claimed fraudulent deductions are advised to rectify their ITRs promptly, paying due taxes and interest to avoid legal repercussions. Failure to comply with notices could lead to audits, penalties, or prosecution.

As the investigation deepens, the Income Tax Department is expected to uncover more details about the intermediaries and entities fueling this scam. The crackdown is likely to prompt stricter regulations and enhanced scrutiny of political donations, aiming to restore integrity to the tax system.

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Keywords: Income Tax Raids, Fake Political Donations, Section 80GGC, Bogus Bills, Tax Evasion, Medical Bill Scams, Tuition Fee Fraud, Income Tax Department, India Tax Crackdown, TAXASSIST

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