Gujarat Police files cases against four political parties over tax evasion and money laundering

Gujarat Police has filed separate criminal cases against four state-based political groups for alleged forgery and money laundering through fake political donations.

The Crackdown

The final case was lodged Saturday against the Satyawadi Rakshak Party, its office-bearers, and a chartered accountant for taking in funds worth 415 crore rupees masked as donations. These funds were then sent back to the donors while charging a commission of up to 10 percent. This followed three other cases registered Friday against the Bharatiya National Janata Dal, the Swatantrata Abhivyakti Party, and the Garib Kalyan Party, along with their office-bearers and auditing chartered accountants. The Income Tax department flagged total tax evasion of more than 700 crore rupees across these complaints.

The Method

The Economic Offences Wing of the state police's CID Crime unit filed the four cases based on Income Tax department complaints. Investigators stated that the parties were used to launder large amounts of cash for donors claiming 100 percent tax exemptions under Section 80GGC of the Income Tax Act. The groups moved the funds to shell companies like Jay Trading Company, Kajal Enterprises, and Parmar Associates under the guise of buying goods. The money was then withdrawn in cash and returned to donors through hawala networks after deducting commissions. For instance, the Bharatiya National Janata Dal amassed over 1,143 crore rupees in bogus donations from more than 56,000 donors between the 2019-20 and 2024-25 financial years, causing a tax loss of around 343 crore rupees. The Swatantrata Abhivyakti Party was probed for receiving 519 crore rupees with no intention of contesting elections, leading to a government tax loss of 155 crore rupees. Meanwhile, the Garib Kalyan Party received 206 crore rupees between 2022 and 2026, routing funds through shell companies like Jalaram and Krishna Enterprises which received over 1,295 crore rupees in total deposits.

Context

Registered Unrecognised Political Parties are bodies registered with the Election Commission of India that do not meet the criteria for recognised state or national parties. Data compiled by poll authorities shows that donations to such unrecognised parties have grown significantly over the past decade. Tax authorities monitor these entities to prevent the misuse of political funding exemptions.