Fraudulent Refund Claims: Income Tax Department to Crack Down; Taxpayers Face Refund Recovery Risk

Taxpayers who filed their Income Tax Returns (ITR) through non-professional agents in hopes of obtaining substantial refunds are now facing serious consequences, as the Income Tax Department begins cracking down on fraudulent refund claims. Recently, instances of false refund claims have surfaced, particularly among employees in various states who used fictitious documentation like fabricated donation receipts and false expenses. Over the last two years, the department has intensified its scrutiny of refund claims across the country. According to tax experts, many taxpayers file their returns through unqualified agents who promise large refunds, putting these taxpayers at risk of legal prosecution.

The Income Tax Department now plans to increase scrutiny over suspected fraudulent refund claims even further. Officials will monitor taxpayers mainly salaried employees who file ITRs collectively through a single, often non-professional, agency. To facilitate this, the Central Board of Direct Taxes (CBDT) has introduced new Standard Operating Procedures (SOPs), including the use of Artificial Intelligence (AI) to identify suspicious returns and refund claims. The department will also examine returns of taxpayers who have come under scrutiny in the last nine years, with particular focus on cases involving collective filings managed by unprofessional agencies. As a result, refunds for some of these individuals have been delayed for months due to ongoing investigations.

Department May Recover Refunds

Experts warn that taxpayers who filed incorrect refund claims are at risk of having their refunds withheld this year, and the Income Tax Department has the authority to recover refunds issued within the last four years if found to be inaccurately claimed. This affects a substantial number of taxpayers now subject to review.

How to Check Refund Status?

Taxpayers can verify the status of their refunds by following these steps:

1. Visit the Income Tax Department portal: www.incometax.gov.in.

2. Log in with User ID (PAN Number) and password.

3. Select “My Account” and click on “Refund/Demand Status.”

4. Click on “Income Tax Returns,” then select the receipt number. A new page will display all relevant ITR information.

Steps to Take in Case of Delay

If there is a delay in receiving a refund, taxpayers should first check their email for any notices or requests for additional information from the Income Tax Department. If the refund claim has been denied, taxpayers can request a re-issue. For claims that appear pending, they may contact the e-filing portal or the assessing officer to request expedited processing.

If the delay persists, taxpayers may:

Contact the Income Tax Department by calling the helpline at 1800-103-4455 or by emailing [email protected] for assistance in checking their refund status.