Salary Refund Claims Under Lens: IT Dept Questions Employers:

The Income Tax Department has started verifying suspicious salary deductions by issuing notices directly to employers to curb fake or inflated refund claims.
Tax Department Seeks Verification of Salary Deductions from Employers

Salary Refund Claims Under Lens: IT Dept Questions Employers
The Office of Assistant Director of Income Tax, Investigation, under the Income Tax Department, Ministry of Finance, had issued a notice dated June 17, 2025, for the purpose of collecting information under the subsection of Section 133(6) of the Income-tax Act, 1961.
This section gives power to the designated authority to collect relevant information from the concerned taxpayers in connection with the proceedings initiated under the Income Tax Act 1961.
The authority asked the taxpayer to disclose the following details:
The department stated that when the Income Tax Returns (ITRs) for the Financial Year 2022-23, furnished by a few government officials through your office, were examined/verified, they were all discovered to have some unusual or potentially suspicious deductions, exemptions, and expenses, leading to significantly high refund amounts.
When these claims were being verified by the tax department, it was noted that several officials working in your organisation seem to have claimed large refunds by using suspicious deductions or exemptions.
It is believed that the employer, after calculating the correct taxable income, had deducted tax at source (TDS) based on the information disclosed by the concerned employees through relevant documents. Now, the department is trying to examine/verify if the claims made are genuine. Hence, the department has asked the concerned authority to disclose relevant information.
Here, we can see these notices are now being issued directly to salary-disbursement offices instead of individual employees. This is an important and positive step because it checks deductions at the stage when they are actually given. By making employers verify deductions using proper documents, it helps stop employees from claiming false or exaggerated expenses.
The authority asked the taxpayer to disclose the following details:
The department stated that when the Income Tax Returns (ITRs) for the Financial Year 2022-23, furnished by a few government officials through your office, were examined/verified, they were all discovered to have some unusual or potentially suspicious deductions, exemptions, and expenses, leading to significantly high refund amounts.
When these claims were being verified by the tax department, it was noted that several officials working in your organisation seem to have claimed large refunds by using suspicious deductions or exemptions.
It is believed that the employer, after calculating the correct taxable income, had deducted tax at source (TDS) based on the information disclosed by the concerned employees through relevant documents. Now, the department is trying to examine/verify if the claims made are genuine. Hence, the department has asked the concerned authority to disclose relevant information.
Here, we can see these notices are now being issued directly to salary-disbursement offices instead of individual employees. This is an important and positive step because it checks deductions at the stage when they are actually given. By making employers verify deductions using proper documents, it helps stop employees from claiming false or exaggerated expenses.About Author

Saloni Kumari
Content Writer
Saloni is a Content Writer with 2+ years of experience at studycafe.in. She writes legal, taxation, and finance related content including GST, Income Tax etc. Skilled in translating complex judicial pronouncements and regulatory developments into clear, and reader-friendly articles. Experienced in covering judgements of ITAT, High Court, GSTAT, and news related to Income Tax, GST, and corporate law. She can be reached at [email protected].
Saloni is a Content Writer with 2+ years of experience at studycafe.in. She writes legal, taxation, and finance related content including GST, Income Tax etc. Skilled in translating complex judicial pronouncements and regulatory developments into clear, and reader-friendly articles. Experienced in covering judgements of ITAT, High Court, GSTAT, and news related to Income Tax, GST, and corporate law. She can be reached at [email protected].
StudyCafe
Delhi, Delhi, India
2980My Recent Articles
- GST TDS Rules Amended: New Provisions for Scrap and Waste Goods from November 1, 2026
- CBIC Introduces 67 Amendments to CGST Rules, 2017; Key Changes Effective from Nov 2026
- MCA Grants Relief to Companies, Extends CRA-4 Filing Deadline to Dec 31; No Additional Fees Applicable
- Vedanta Iron and Steel's Subsidiary Faces Proposed GST Recovery of Rs 11.76 Crore Plus Interest and Penalty
- CBIC Expands GST E-Invoicing Scope to Cover RCM and Import of Services Effective January 1, 2027
Up Next
Loading suggestions…
Recent Posts
All Posts
Tags
Recent Posts
All Posts








