India's Congress party says bank accounts frozen over $25m tax demand

India's main opposition Congress party said on Friday its bank accounts had been frozen over a 2.1 billion rupee ($25.3 million) income tax demand in connection with a dispute, months before national elections.

The party called the action "a deep assault on India's democracy", adding that an income tax tribunal had however allowed the party to partially operate its accounts until Feb. 21, when it would hear the case.

Congress treasurer Ajay Maken told reporters the party had filed a complaint against the tax department after it told banks to freeze funds in its accounts.

"We got information two days back that cheques being issued by us were not being honoured by banks ... We don't have money to pay electricity bills, to pay salaries to our employees," Maken said.

Maken said the frozen accounts included funds collected by the party through crowd-funding and membership drives, adding that the dispute with the tax department was in connection with an issue dating back to 2018-19.

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The income tax department did not respond to calls and messages seeking comment.

A source familiar with the matter said Congress was supposed to pay 1.05 billion rupees in taxes in the case and following payment delays, this amount had risen to 1.15 billion rupees and therefore an equal amount in the party's accounts had been frozen.

"Congress has not been stopped from paying and receiving funds. This is routine procedure with those not paying taxes," the source said, adding that rules will be followed to recover 1.15 billion rupees.

The tax department's action comes just weeks before dates for a general election, which has to be conducted by May, are to be announced.

Congress, once India's most dominant party, has sunk to historic lows in parliament and in many states after Prime Minister Narendra Modi swept to power in 2014.

"Power drunk Modi Govt has frozen the accounts of the country's largest Opposition party," Congress president Mallikarjun Kharge posted on X. "We appeal to the Judiciary to save the multi-party system in this country and protect India's Democracy."