The Central Board of Direct Taxes (CBDT) warns that a significant number of false claims have been filed about donations to charitable organizations or Registered Unrecognized Political Parties (RUPPs), which have lowered their tax liabilities.
The Finance Ministry announced on Saturday (December 13, 2025) that the Income Tax department has begun to issue taxpayers SMS and email alerts regarding improper deduction claims pertaining to unrecognized political parties or charitable organizations.
Through data analysis, the Central Board of Direct Taxes (CBDT) reported that a significant number of fraudulent claims have been made regarding donations to charitable organizations or Registered Unrecognized Political Parties (RUPPs), which have lowered their tax obligations and claimed fraudulent refunds.
“As a taxpayer-friendly measure, a focused NUDGE campaign has been initiated, giving them the chance to revise their ITRs and remove any incorrect claims. According to a statement from the Finance Ministry, such taxpayers would get SMS and email advisories on their registered mobile numbers and emails starting on December 12, 2025.
Evidence gathered from enforcement actions, according to the CBDT, showed that RUPPs—many of which were non-filers, non-operational at their registered addresses, and not involved in any political activity—were being used as conduits for money transfers, hawala transactions, cross-border remittances, and the issuance of false donation receipts. According to the report, the CBDT conducted follow-up searches against a few of these RUPPs and trusts and collected evidence of fraudulent individual donations and corporate social responsibility.
According to CBDT’s data analytics, a large number of taxpayers are suspected of being duped into claiming deductions for donations made to dubious organizations or of failing to provide pertinent information to verify the legitimacy of the organizations.
It further stated that many taxpayers have already filed updated ITRs for previous years and changed their income tax returns for the current AY, which is 2025–2026.
“Every taxpayer is advised to ensure that correct mobile and email IDs are mentioned in their filings with the Department so that they do not miss out any communication,” the CBDT stated.
FAQs: Income Tax Alerts on Bogus Political & Charity Donation Claims
1. Why is the Income Tax Department sending SMS and email alerts to taxpayers?
The Income Tax Department has identified a large number of incorrect or fraudulent donation claims made to charitable organizations and Registered Unrecognized Political Parties (RUPPs). As part of a taxpayer-friendly NUDGE campaign, alerts are being sent to allow taxpayers to voluntarily correct their Income Tax Returns (ITRs).
2. What are Registered Unrecognized Political Parties (RUPPs)?
RUPPs are political parties that are registered with the Election Commission but not recognized at the national or state level. According to CBDT, many such entities were found to be non-operational or non-compliant, and some were allegedly misused for issuing fake donation receipts.
3. What type of donation claims are under scrutiny?
Claims related to:
Donations to dubious charitable trusts
Donations to Registered Unrecognized Political Parties (RUPPs)
Donations used to unlawfully reduce tax liability or claim refunds
4. What did CBDT find through data analytics and enforcement actions?
CBDT found evidence suggesting that:
Many RUPPs were non-filers or non-functional
Some were used for hawala transactions, money laundering, and cross-border remittances
Fake donation receipts were issued to individuals and companies, including misuse under CSR claims
5. What is the NUDGE campaign launched by the Income Tax Department?
The NUDGE campaign is a compliance initiative that encourages taxpayers to voluntarily review and revise incorrect claims without immediate penal action, helping them avoid future scrutiny and penalties.
6. What should taxpayers do if they receive an SMS or email from the Income Tax Department?
Taxpayers should:
Review their donation claims carefully
Verify the legitimacy of the organization
File an updated or revised ITR if any incorrect claims were made
7. Can taxpayers revise their ITR for previous years?
Yes. CBDT has stated that many taxpayers have already filed updated ITRs for previous years and revised returns for the current Assessment Year 2025–26.
8. What happens if a taxpayer ignores the alert?
Ignoring the alert may lead to:
Detailed scrutiny or reassessment
Penalty, interest, or prosecution, if fraud is established
Recovery of wrongly claimed refunds
9. How can taxpayers verify if a donation is eligible for tax deduction?
Taxpayers should:
Check the organization’s valid registration under the Income Tax Act
Verify approval under relevant sections (like 80G)
Avoid donations to entities lacking transparency or compliance history
10. Why is updating mobile number and email ID important?
CBDT has advised taxpayers to ensure correct mobile numbers and email IDs are mentioned in their filings so they do not miss important official communications from the Income Tax Department.
11. Are all donations to political parties or charities considered suspicious?
No. Genuine donations made to recognized political parties or properly registered charitable organizations are perfectly legal. Only donations to unrecognized, non-compliant, or dubious entities are under scrutiny.
12. Which sections of the Income Tax Act allow donation deductions?
Common sections include:
Section 80G – Donations to approved charitable institutions
Section 80GGC / 80GGB – Donations to political parties (individuals and companies)
Claims outside these provisions or without valid documentation may be disallowed.
13. What documents should taxpayers keep to prove a genuine donation?
Taxpayers should retain:
Donation receipt with PAN of the trust or political party
Mode of payment proof (bank transfer, cheque, UPI)
Registration or approval details of the organization
Cash donations above prescribed limits are not eligible for deduction.
14. Can taxpayers withdraw a false claim without facing penalties?
Yes. Under the NUDGE campaign, taxpayers are given an opportunity to voluntarily correct their returns. Early compliance may help avoid penalties and prosecution, subject to assessment by the department.
15. What penalties can apply if fraudulent claims are detected?
If fraud is established, penalties may include:
Disallowance of deduction
Interest under Sections 234A/B/C
Penalty up to 200% of tax evaded
Prosecution in serious cases
16. How did CBDT identify these suspicious claims?
CBDT used advanced data analytics, cross-verification with:
Election Commission records
ITR filings of RUPPs and trusts
Bank transaction data
This helped detect unusual donation patterns and refund claims.
17. Are corporate taxpayers also under scrutiny?
Yes. CBDT found evidence of fake CSR donations routed through certain trusts and RUPPs. Both individual and corporate taxpayers are being reviewed.
18. What if a taxpayer was misled by an agent or intermediary?
CBDT stated that many taxpayers may have been unknowingly duped. Such taxpayers are encouraged to correct their ITRs voluntarily to avoid future complications.
19. How can taxpayers file an updated return?
Taxpayers can file:
Revised Return (if within the allowed time)
Updated Return (ITR-U) for previous years through the income tax portal
20. Will corrected taxpayers still face scrutiny later?
Voluntary compliance significantly reduces the risk of further action. However, cases involving deliberate fraud or money laundering may still be investigated.
21. Does receiving an SMS/email mean a notice has been issued?
No. The SMS/email is only an advisory, not a statutory notice. It is meant to nudge taxpayers to review and correct errors before formal proceedings begin.
22. How can taxpayers check if a political party is recognized?
Taxpayers should verify:
Recognition status on the Election Commission of India website
Valid PAN and compliance history
Whether the party files regular income tax returns
23. What should taxpayers avoid going forward?
Taxpayers should avoid:
Claiming deductions based solely on agents’ advice
Donations without proper documentation
Trusts or political entities offering guaranteed tax refunds
24. What is CBDT’s final message to taxpayers?
CBDT has urged taxpayers to:
Review past donation claims
File corrected returns where necessary
Keep contact details updated
Follow ethical and lawful tax practices
