The Income Tax Department is investigating three Gujarat-based political parties for allegedly running an Rs 1,869 crore donation laundering scheme. The probe focuses on accusations that these entities issued fake donation receipts to help donors claim tax benefits, causing an estimated Rs 560 crore loss to the national exchequer. Authorities are currently reviewing financial records and investigating the alleged use of shell companies in the operation.
The Income Tax Department has launched an investigation into three Gujarat-registered political parties, suspecting them of operating a large-scale donation laundering network. Authorities allege that these entities helped donors claim fraudulent tax deductions by issuing fake receipts, resulting in an estimated tax evasion of Rs 560 crore. The total value of the transactions under scrutiny is reported to be Rs 1,869 crore.
Investigators describe a process where these political entities accepted donations through standard banking channels like RTGS and cheques. Instead of using the funds for political activities, the parties allegedly provided donors with fabricated donation slips, allowing them to claim 100 per cent tax deductions. Once the funds were received, the parties reportedly transferred the money to a network of shell companies using fake purchase bills. The cash was then funneled back to the original donors, with the political parties retaining a commission of 2 to 10 per cent for the service.
The Bharatiya National Janata Dal (BNJD) is the primary focus of the investigation. Official records indicate the party received over Rs 1,143 crore from more than 56,000 donors between fiscal years 2019 and 2025. This activity alone is linked to an estimated Rs 343 crore in tax evasion. Law enforcement has identified party president Surendra Vitthalbhai Gajera as a central figure in the alleged operation. Evidence, including digital communications and hawala receipts, points to the use of entities such as JE Trading and Kajal Enterprises to facilitate the money movement.
In addition to the BNJD, the Income Tax Department is examining the activities of the Garib Kalyan Party and the Swatantrata Abhivyakti Party. Records for the Garib Kalyan Party suggest that it accepted Rs 206 crore between 2022 and 2026 without maintaining valid accounting documentation. Investigators claim that the party submitted forged documents to the Election Commission of India to give an appearance of financial legitimacy, leading to a reported revenue loss of Rs 62 crore for the government.
The investigation has also extended to the professionals involved in the financial reporting of these entities. Chartered accountants associated with these parties are facing scrutiny for allegedly signing off on fabricated audit reports without performing necessary verification of the financial transactions. The case highlights the importance of regulatory oversight in political funding and the strict monitoring of shell company transactions. The next phase of the investigation is expected to involve further questioning of the involved parties and a deeper review of the digital and physical evidence seized during the probe.