The Congress on Wednesday alleged that more than Rs 10,000 crore in black money has been generated through “registered unrecognised political parties” (RUPPs), with senior leader and former MP Shaktisinh Gohil accusing the BJP and its associates of using such entities to facilitate large-scale income tax evasion.
RUPPs are parties that register with the Election Commission of India under Section 29A of the Representation of the People Act but have never contested an election or gained state or national recognition. Registration still entitles them to accept donations and claim income tax exemptions — a provision that tax and poll authorities have flagged for misuse in the past. The Income Tax Department has earlier carried out coordinated raids on RUPPs and linked entities across several states, and the Central Board of Direct Taxes has separately flagged a multi-thousand-crore bogus political-donation network involving RUPPs and chartered accountants. The Election Commission, too, has periodically delisted hundreds of RUPPs for failing to contest elections or for financial irregularities. It is against this backdrop that the Congress raised fresh allegations at a press conference on Wednesday.
Addressing the press conference, Gohil disclosed that around 3,260 RUPPs were being used as a mechanism through which individuals and companies could claim tax deductions on donations made to political parties, while a portion of the money was returned to donors as cash after deducting commissions.
“More than Rs 10,000 crore of black money has been generated through these fake political parties and there has been an open loot of tax revenue,” Gohil alleged.
He said donations made to political parties qualify for tax benefits under provisions of the Income Tax Act, including Sections 80GGC and 80GGB. According to him, the racket involved donations being routed to RUPPs, with associates of these parties retaining commissions ranging between 2 and 15 per cent, and returning the remaining amount to donors in cash.
Gohil said individuals with taxable income above Rs 5 crore could face an effective tax burden of over 42 per cent — after accounting for basic income tax, surcharge and cess — and alleged that such arrangements were being exploited to evade legitimate tax liabilities.
He further said tax authorities and tribunals had detected instances of such fraud but questioned why criminal prosecution and penalties had not followed. “If deliberate false entries are made for tax evasion, the law provides for stringent penalties and prosecution,” Gohil said, citing Sections 276C(1) and 277 of the Income Tax Act.
He alleged that despite detection of these violations, neither the 200 per cent penalty nor criminal prosecution — which carries a provision for imprisonment of up to seven years — had been pursued in the cases he cited.
Gohil also questioned the role of the Election Commission, saying its 2014 guidelines on transparency and accountability in political funding required parties to disclose details of donations and expenditure, and mandated that this information be shared with the Income Tax Department. He alleged these requirements had not been adequately enforced and demanded action against those involved in creating and operating such political parties.
“Modi ji remains silent on black money while the country is being run on what we call fake GDP figures,” Gohil said, accusing the BJP government of adopting a “dual approach” towards black money.
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