IT dept uncovers ₹800 crore CSR fund siphoning racket after raids across 6 states
The Income Tax Investigation Unit in Agra carried out searches in Uttar Pradesh, Rajasthan, Gujarat, Maharashtra, West Bengal and Madhya Pradesh since August 19
Lucknow: Income tax investigators have uncovered a corporate social responsibility (CSR) fund siphoning racket worth over ₹800 crores, after raiding 30 locations across six states, IT officials said on Saturday.
The Income Tax Investigation Unit in Agra carried out searches in Uttar Pradesh, Rajasthan, Gujarat, Maharashtra, West Bengal and Madhya Pradesh since August 19, targeting non-profit organisations suspected of misusing CSR donations mandated under Section 135 of the Companies Act, a senior Income Tax official said.
The ongoing operation, directed by the principal director of Income Tax (Investigation) in Kanpur, is still continuing with major findings related to tax evasion worth several crores expected, an official requesting anonymity said.
“While busting the entire complex network, the Income Tax investigation officers have found another piece of evidence which suggests bogus remittances of more than 10,000 crore outside of the country to foreign countries like Hong Kong, Singapore, Malaysia, China etc,” he added.
Three trusts have emerged as central to the elaborate scheme: Jan Jagriti Sevarth Sansthan in Mathura, Dr Brajmohan Sapoot Kala Sanskriti Seva Sansthan in Bhilwara, Rajasthan, and Raginiben Bipinchandra Sevakarya Trust in Ahmedabad, Gujarat.
Officials said the searches revealed that these three trusts were involved in allegedly siphoning off more than ₹800 crores worth of CSR donations.
“Although these organisations claimed to operate in education, health, employment and social welfare sectors, search investigations revealed that these trusts were not involved in any charitable activities,” the official explained. “The investigation has found that not a single penny has been invested in any kind of social work.”
According to officials, the searches uncovered a complex network of several bogus and shell companies, managed by a group of chartered accountants and controllers of these trusts, which facilitated the diversion of CSR funds to foreign jurisdictions.
The crackdown highlights growing concerns over the misuse of India’s vast non-profit sector. A senior official said that India has more than three million NPOs (non-profit organisations), and government funds along with mandatory corporate social responsibility requirements provide substantial funding to the sector annually.
Tax officials said money laundering risks within the NPO sector have been tied to abuses of Section 135 of the Companies Act, with companies channelling mandatory CSR funds into fake trusts that then covertly reclaim the money through cash withdrawals or complex financial transactions.
The investigation spans Uttar Pradesh, Rajasthan, Gujarat, Maharashtra, West Bengal, and Madhya Pradesh, and has uncovered substantial incriminating evidence against various corporate entities, trusts, shell companies, chartered accountants, and diamond merchants involved in the tax evasion scheme, officials said.
