Key Points
Several individuals, and in some cases firms, had transferred sums from their bank accounts to these political outfits in the financial year 2018-19, only to get back most of it as cash after the money changed multiple hands...
The first leg of the transaction --- where money was donated by cheque or electronic transfers with the donor receiving a receipt from the political party --- would come across as legitimate donation..
But after that the donations were used by the parties to book sham expenses under various heads to pay off fake vendors acting as intermediaries; the money then flowed through a string of handlers to the donor who received an amount in cash (less commissions of 3.5 to 5%)...
In the latter cases, the department would try to establish a money trail on the back of certain evidences like book entries, WhatsApp chats, and statements of intermediaries or office bearers of the political parties in question that the money found its way back as cash to the donor, said Siddharth Banwat, a chartered accountant and partner with a leading CA firm...
While some of the charitable trusts offer such `cash pay back deals to donors, the tax benefit is more in donations to a political party..
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