Congress Alleges Income Tax Evasion Through Unrecognised Political Parties

NEW DELHI, Sept 10: The Congress on Wednesday accused the Modi Government of failing to act against an alleged Rs 10,000 crore tax evasion racket involving thousands of registered unrecognised political parties and demanded a Joint Parliamentary Committee (JPC) investigation into the matter.

Congress general secretary in-charge communications Jairam Ramesh alleged that 3,260 registered unrecognised political parties were being used as a mechanism to convert black money into legitimate funds. He questioned who was behind the alleged network and demanded answers from the government.

“The Modi Government must answer to the nation,” Ramesh said in a post on X.

He alleged that despite cases involving alleged tax evasion and money laundering through political entities coming to light, the government had failed to take effective action against those responsible.

Ramesh also questioned why penalties and criminal proceedings had not been initiated against those allegedly involved in the scheme. He referred to Congress Rajya Sabha MP Shaktisinh Gohil’s allegations that transactions involving the 3,260 registered unrecognised political parties had resulted in tax evasion exceeding Rs 10,000 crore.

The Congress leader also recalled the action taken against his party ahead of the 2024 Lok Sabha elections, alleging that its bank accounts were frozen and it faced substantial tax demands.

“Why is there no investigation into these 3,260 sham political parties and the associated cases of tax evasion?” Ramesh asked.

He further alleged that the parties may have enjoyed political patronage and questioned whether the BJP leadership had any connection with the alleged activities.

There was no immediate reaction from the government to the allegations.

Addressing a press conference, Gohil claimed that the 3,260 registered unrecognised political parties were being used to evade income tax. He referred to provisions of the Income Tax Act concerning deductions available for donations made to political parties.

According to Gohil, the alleged racket involved donations amounting to around Rs 10,000 crore. He said concerns regarding such transactions had been raised in an NGO report in 2025, but alleged that the government had not taken adequate action.

Gohil said authorities should reject donations linked to entities found guilty of wrongdoing and deny them associated tax benefits.

He also demanded that those found guilty face penalties and criminal prosecution under relevant provisions of the Income Tax Act.

The Congress leader alleged that chartered accountants could have played a significant role in facilitating such transactions. He claimed that income tax officials had recommended action against professionals involved in alleged violations but alleged that no effective orders had followed.

Gohil further claimed that the Income Tax Appellate Tribunal had described such tax evasion as harmful to the country’s economy and security.

He also raised questions about the Election Commission’s role in monitoring political donations and expenditure. Gohil said election authorities in the states were responsible for scrutinising the financial activities of political parties.

The Congress leader additionally criticised the current process for appointing the Chief Election Commissioner, alleging that changes to the selection mechanism had weakened the independence of the poll panel.

Gohil claimed that the Chief Justice of India had earlier been part of the selection process but was subsequently replaced by a Union minister. He alleged that the revised system could allow the government greater influence over the appointment.

The Congress listed several demands, including a JPC probe into the alleged financial irregularities, imposition of penalties under relevant provisions of the Income Tax Act and criminal proceedings against individuals found guilty.

It also demanded action against chartered accountants allegedly involved in facilitating fraudulent transactions, including cancellation of their professional licences if they were convicted.

The party further sought criminal proceedings against those running the alleged fake political entities.

Gohil also called for greater transparency in political funding and demanded that details of donations received and used during elections be placed in the public domain.

He finally sought disclosure of information on how many individuals associated with the alleged entities subsequently joined the BJP.