Cyber Crime
IT Professionals Under Investigation for Rs 110 Crore Fake Donation Scam
Hyderabad: A massive tax refund scam of Rs 110 crore has come to light in Hyderabad, where several IT professionals are accused of making fake political donations to claim tax exemptions under Section 80GGC of the Income Tax Act.
The Income Tax (IT) Department is investigating professionals from 36 IT companies who allegedly misused the provision, which allows tax deductions for donations to registered political parties. However, these donations were reportedly fabricated, and the money was never actually contributed.
How the Scam Worked
One case that caught investigators’ attention involved an IT employee earning Rs 46 lakh annually, who claimed to have donated Rs 45 lakh—an unrealistic figure. In some instances, the alleged donors transferred money via cheque or bank transfer, only to receive the amount back in cash after a commission deduction. This fraudulent cycle allowed them to claim tax refunds without making real contributions.
Tracing the Fraud: A Common Email Address Uncovered
Investigators found a common email address linked to multiple fraudulent tax filings. Several IT employees used the same email to claim false tax exemptions.
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Additionally, many of the Registered Unrecognized Political Parties (RUPPs) involved in the scam were linked to Gujarat, Telangana, and other states. Some of these political entities had never contested elections or submitted donation reports to the Election Commission (ECI).
Notices and Penalties for Fraudulent Claims
The IT Department will scrutinize tax returns from FY 2021-22 to 2023-24, sending notices to employees demanding explanations for their fake refund claims.
- Taxpayers will be asked to withdraw incorrect claims.
- They will receive SMS and email alerts, advising them to recheck filings.
- If incorrect claims are found, taxpayers must file an updated return (ITR-U) by March 31, 2025.
- Failure to comply could result in a 200% penalty.
Companies Distancing Themselves
Many big tech firms are now stopping deductions under Section 80GGC and opting for Tax Deducted at Source (TDS). However, employees have been bypassing this restriction by independently claiming refunds later.
At one large IT company, 430 employees claimed tax deductions totaling ₹17.8 crore—an average refund of ₹4.2 lakh per person. Sources clarify that companies were not involved in the fraud, as individual employees filed false claims.
Government’s Response: Awareness and Crackdown
The IT Department’s Hyderabad unit has launched an awareness campaign in major IT and financial firms, warning employees against misusing Section 80GGC.
From January 28 to 30, 2025, officials held sessions in these companies, emphasizing the legal consequences of fraudulent tax claims. Employees were advised to file honest tax returns to avoid penalties and legal action.
With the scam unraveling, authorities are tightening tax regulations to prevent misuse of political donation exemptions in the future.
