Understanding the Surge of 80GGC Messages from the Income Tax Department
Many taxpayers have recently received multiple SMS messages from the Income Tax Department (ITD) regarding claims made under Section 80GGC of the Income Tax Act. These messages serve as reminders or alerts about deductions claimed for political donations and are intended to verify the legitimacy of such claims.
What is Section 80GGC?
Section 80GGC allows individual taxpayers to claim a deduction for donations made to political parties or electoral trusts registered under the Representation of the People Act, 1951. This deduction is fully allowed provided the donation is made by non-cash modes such as cheque, bank transfer, or digital payments. The section aims to encourage transparent political funding while offering tax benefits to donors.
Why Are These Messages Coming?
The Income Tax Department is scrutinizing claims made under Section 80GGC to curb fake or incorrect claims that could lead to tax evasion. If you have claimed deductions under this section in your Income Tax Return (ITR), the department requests you to verify that the claim is genuine with proper documentation like donation receipts and bank statements. If not, you are asked to correct your ITR by filing an updated return called ITR-U within the stipulated timeline.
What Should You Do If You Receive Such a Message?
- If the claim is genuine:
- Keep your donation receipts and bank proof ready for verification.
- Verify that the political party or electoral trust is duly registered.
- You may not need to take further action unless requested by the ITD.
- If the claim is incorrect or wrongly made:
- File an Updated Return (ITR-U) to surrender the wrongly claimed deduction.
- Recalculate your taxable income by excluding the 80GGC deduction.
- Pay the additional tax liability which includes the regular tax, interest, plus an additional 25% or 50% penalty depending on when you update the return:
- Within 12 months: Additional 25% of tax + interest
- Between 12 to 24 months: Additional 50% of tax + interest
- Between 24 to 36 months: Additional 60% of tax + interest
- Between 36 to 48 months: Additional 70% of tax + interest
- Filing ITR-U:
- Log in to the Income Tax Department’s e-filing portal.
- Select the option for filing an Updated Return under Section 139(8A).
- Upload and verify the corrected income tax return without the 80GGC deduction.
Consequences of Ignoring the Message
Ignoring these messages or failing to correct a wrongly claimed deduction can lead to:
- Scrutiny and reassessment by the Income Tax Department.
- Heavy penalties up to 200% of the tax payable under provisions related to tax fraud and misreporting.
- Possible prosecution in severe cases of tax evasion.
- Loss of opportunity to voluntarily correct mistakes via ITR-U, which is only available before a scrutiny notice is issued.
How to Calculate Your Tax Liability on 80GGC Deductions (Video Guide)
Click here to watch the video
This video explains step-by-step how to calculate your tax liability if you need to surrender the 80GGC deduction and file ITR-U to correct your tax return. It includes detailed instructions on recalculating taxable income and paying the additional tax and interest.
Final Advice
Always ensure that any deduction claimed under Section 80GGC is backed by valid documentation and made to registered political entities through traceable payment methods. If you find any incorrect claims, act promptly by filing ITR-U to rectify the error and avoid heavy
