After raiding 30 locations across six states, income tax investigators discovered a corporate social responsibility (CSR) cash syphoning scheme valued at over ₹800 crores, IT officials announced on August 19. According to a senior income tax official, since August 19, the Income Tax Investigation Unit in Agra has conducted searches in Uttar Pradesh, Rajasthan, Gujarat, Maharashtra, West Bengal, and Madhya Pradesh in an effort to find non-profit organisations suspected of abusing CSR donations required by Section 135 of the Companies Act.

According to an official, the ongoing investigation, which is being led by the principal director of Income Tax (Investigation) in Kanpur, is still ongoing and is anticipated to yield significant findings on tax evasion worth many crores.

“The Income Tax investigation officers have discovered additional evidence that points to fraudulent remittances of over 10,000 crore to foreign countries such as Hong Kong, Singapore, Malaysia, China, and others while dismantling the entire intricate network,” he continued.

The intricate plan revolves around three trusts: the Raginiben Bipinchandra Sevakarya Trust in Ahmedabad, Gujarat; the Jan Jagriti Sevarth Sansthan in Mathura; and the Dr. Brajmohan Sapoot Kala Sanskriti Seva Sansthan in Bhilwara, Rajasthan.

According to officials, the searches showed that these three trusts were implicated in the purported syphoning out of over ₹800 crores in CSR payments.

According to the official, “Search investigations showed that these trusts were not involved in any charitable activities, despite the fact that these organisations claimed to operate in the education, health, employment, and social welfare sectors.” “No single penny has been invested in any kind of social work, according to the investigation.”

Officials said that the searches turned up a complicated web of numerous shell and fraudulent businesses run by a group of chartered accountants and controllers of these trusts, which made it easier to divert CSR monies to other countries.

Growing worries about the abuse of India’s sizable non-profit industry are brought to light by the crackdown. According to a top source, India has over three million non-profit organisations (NPOs), and the sector receives significant yearly funding from government grants as well as mandated corporate social responsibility standards.

According to tax officials, corporations that divert mandated CSR payments into fictitious trusts and then secretly retrieve the funds through cash withdrawals or intricate financial transactions have been linked to money laundering threats in the NPO sector.

Significant incriminating evidence has been found against a number of corporate entities, trusts, shell companies, chartered accountants, and diamond merchants involved in the tax evasion scheme, according to officials. The investigation covers the states of Uttar Pradesh, Rajasthan, Gujarat, Maharashtra, West Bengal, and Madhya Pradesh.