Why So Many Taxpayers Are Getting Questioned
Section 80GGC looks simple from the outside, but it’s one of the most heavily-scrutinised deductions today. A lot of taxpayers claimed it based on receipts given by intermediaries, recommendations by agents, or generic political-party slips. Now, the department has started sending SMS alerts, email warnings, and then 143(2) scrutiny notices and 131 summons when the donation doesn’t hold up during verification.
Let’s break down what’s happening, why the system is flagging these claims, what the officer actually checks, and how to protect yourself before it becomes a penalty case.
1. The New SMS/Email Alert on 80GGC
Many taxpayers are now receiving the following alert:
“It is observed that you have claimed deduction u/s 80G/80GGC of Rs.500000 in the ITR for A.Y. 2023-24 for donations made to such suspicious entities. It is advised that the claim of deduction u/s 80GGC/80G may be reviewed and may be corrected by updating the ITR u/s 139(8A) of the Act.”
This is not a random message.
It means your donation has already been flagged by the system — either because the political party looks doubtful or its compliance records don’t exist.
This alert is your window to fix the return before the department issues a scrutiny notice.
2. Why the Department Flags 80GGC Claims
Here are the most common reasons your claim lands on the risk list:
- Donations made to non-registered political parties
- No matching entry in the bank statement
- Payment reference numbers that don’t match banking records
- Generic receipts without PAN, date, or mode of payment
- Parties that have not filed their own tax return
- Parties that have not filed required reports with the Election Commission
- Suspicious entities flagged by data analytics systems
- Series of identical or round-figure donations by multiple taxpayers
Once flagged, your claim automatically becomes a candidate for 143(2) scrutiny.
3. What the Assessing Officer Checks During Scrutiny
Anyone who receives a 143(2) notice for 80GGC should be prepared for a very detailed document request.
Here’s the kind of information the officer typically asks for:
1. Names of political parties donated to
They verify whether the parties are real, registered, and eligible.
2. Original donation receipts
The officer expects receipts that clearly show:
- Party PAN
- Donation amount
- Mode of payment
- Exact date
- Eligibility under section 80GGC
3. Proof that the donation wasn’t in cash
You must provide your bank statement or passbook entries highlighting the donation.
If there’s no banking trail, the claim collapses immediately.
4. Matching the ITR claim with evidence
You need to reconcile:
- Amount claimed in Schedule 80GGC
- Bank entries
- Payment reference numbers (like CHE5898943, CKV0138760)
- Receipts
Any mismatch becomes a ground to disallow the entire claim.
5. Whether the political party is legally compliant
Officers often ask for proof that the political party:
- Is registered under section 29A
- Has filed its return for AY 2024–25
- Has claimed exemption under section 13A
Most taxpayers don’t have this and can’t get it either.
6. Confirmation from the political party on compliance filings
Officers also ask for:
- Contribution report filed under section 29C
- Date of submission to the Election Commission
- Copy of Form 24A under Rule 85B
- Confirmation of ECI registration status (active/ revoked)
These documents are rarely available to individual donors.
7. Conflict-of-interest declaration
You may be asked to confirm that neither you nor your family members are office bearers of the political party.
4. Why Many Claims Get Disallowed
Most taxpayers fail at the documentation stage. Common issues include:
- Donations not reflecting in bank statements
- Receipts issued by unregistered or doubtful entities
- No compliance proof from political parties
- Payment references not matching
- Donation done in cash
- Fake or templated receipts without signatures
Once the officer concludes the donation is not genuine, they disallow the entire deduction.
And then the problem gets bigger.
5. The Penalty Danger: Section 270A (50% to 200%)
After disallowance, penalty proceedings under section 270A are almost automatic.
Here’s how the penalty works:
50% penalty – Under-reporting
Applied when the officer believes the claim was incorrect but not intentionally false.
200% penalty – Misreporting
Applied when:
- Receipts are found fake
- Parties are not registered
- Bank entries don’t match
- You claimed donations that never happened
- Confirmations from political parties don’t exist
In 80GGC cases, officers often lean towards misreporting, meaning a 200% penalty.
This is why it’s important to act early.
6. If You Have Doubts, File an Updated Return Before Scrutiny Begins
If the SMS alert made you uncomfortable, or if you’re not confident about the validity of your receipts, updating the return early is often the smartest move.
Filing an updated return under section 139(8A):
- Removes the risky 80GGC claim
- Closes the issue before scrutiny
- Helps you avoid 270A penalty
- Prevents years of assessment follow-up
Once a 143(2) notice is issued, this option is gone.
Correcting the return early is often cleaner, safer, and cheaper.
7. What You Should Do If You Already Received a Notice
You’ll need a clean and organised set of documents:
✔ Bank statements showing donation entries
✔ Original receipts from political parties
✔ Payment reference IDs
✔ Donation confirmation letters (if available)
✔ PAN and registration proof of the political party
✔ Any communication with the political party
✔ Copy of the ITR
✔ AIS/26AS verification
If any of these are missing, be prepared for the deduction to be rejected.
FAQs
1. Is the SMS alert a notice?
No. It’s a warning. But it means your claim is already under scrutiny.
2. Can I ignore the SMS?
You shouldn’t. It’s better to fix the issue before a 143(2) notice arrives.
3. Can I withdraw my 80GGC claim after receiving a notice?
You can explain the mistake, but the officer may still initiate penalty.
4. Do all 80GGC claims lead to 270A penalty?
Not all, but large or non-verifiable claims are highly prone to penalty.
5. What if the political party doesn’t cooperate?
Your claim is at risk. The burden of proof is on the taxpayer.
6. How long does the scrutiny process last?
Usually 6–12 months, depending on the documents provided.
7. Will filing an updated return stop future action?
If done before a notice, yes — it typically closes the issue at CPC/system level.