Income-tax raiding individuals for Fake deduction claims:

Income-tax raiding individuals for Fake deduction claims The Income Tax department observed that many taxpayers who file Income Tax Return (ITR) were misusing the tax benefits available under the Income Tax Act, 1961, often with the help of professionals acting as intermediaries. Investigations revealed that many ITR preparers and intermediaries are filing ITR with fake deductions and exemptions, such as submitting fake TDS returns to claim refunds.

Also Read

Income Tax Dept Raids Advisors Facilitating Bogus ITR Deductions

Therefore, the Income Tax Department launched a major verification operation at several places in India. The operation targets people and organisations that are helping others make fake claims for tax deductions and exemptions in their Income Tax Returns (ITRs).

Which Deductions Are Being Misused?

During the analysis, it was found by the income tax department that many taxpayers were misusing the deductions under sections 10(13A), 80GGC, 80E, 80D, 80EE, 80EEB, 80G, 80GGA, and 80DDB. Additionally, many individuals have claimed these benefits without any valid reason. These taxpayers include employees of multinational companies (MNCs), public sector units (PSUs), government departments, educational institutions, as well as business owners. These ITR preparers promise the taxpayers high refunds for a commission. The ITR preparers create temporary email IDs for filing many ITRs. These email IDs are later dumped, and therefore, the official notices could not be delivered to the taxpayer.

Also Read

Tax Professionals Raise Alarm Over Delay in ITR Utility Release: AGFTC and ITBA Submit Representation to Finance Minister

I-T Dept Using AI Tools to Detect Fraudulent Activity

The Income Tax department has used the data from other third-party sources, ground-level intelligence, and advanced artificial intelligence tools to detect such suspicious activities. These findings were supported by recent raids in Maharashtra, Tamil Nadu, Delhi, Gujarat, Punjab, and Madhya Pradesh, where strong proof of these fake claims by different groups and people was found.

Voluntary Compliance by Taxpayers

The Income Tax Department has been encouraging people to voluntarily comply. Over the past year, the department has made major efforts to reach out to taxpayers, like sending SMS and email alerts to ask the suspected taxpayers to correct their returns and pay the right amount of tax. Additionally, the department has also scheduled awareness programs in various locations, including educational campuses and other venues. Due to these efforts, around 40,000 people have updated their tax returns in the last four months, voluntarily cancelling false claims worth about Rs 1,045 crore.

Also Read

ITR-2 and ITR-3 Excel Utilities Released for AY 2025-26: Know What is New

However, there are still some taxpayers who do not comply, and therefore, the Income Tax Department is taking strict action against such taxpayers claiming wrong deductions. The investigation is still ongoing and is expected to find the key evidence, especially digital records, that will help reveal and break up the networks behind these illegal schemes.

What Should Taxpayers Do?

Taxpayers must correctly file their ITRs using the correct particulars of their income and should not listen to the unauthorised party that promises large refunds by fraudulently claiming deductions and exemptions.