New Delhi [India], July 14 (ANI): The Income Tax Department launched a large-scale verification operation across multiple locations in the country on Monday, targeting individuals and entities involved in making fraudulent claims of deductions and exemptions in Income Tax Returns (ITRs).
According to a statement by the Central Board of Direct Taxes (CBDT), the action follows a comprehensive analysis revealing misuse of tax benefits under the Income-tax Act, 1961, often in collusion with professional intermediaries.
The investigation has exposed organized rackets led by certain ITR preparers and intermediaries who filed returns using fictitious deductions and exemptions. Some even filed false TDS returns to claim inflated refunds, the statement said.
To detect suspicious patterns, the Department employed financial data from third-party sources, ground-level intelligence, and advanced artificial intelligence tools.
These findings were corroborated by recent search and seizure operations in Maharashtra, Tamil Nadu, Delhi, Gujarat, Punjab, and Madhya Pradesh, where substantial evidence of fraudulent activity was uncovered.
The CBDT highlighted widespread abuse of deductions under various sections, including:
- Section 10(13A) – House Rent Allowance
- Section 80GGC – Contributions to political parties
- Section 80E – Interest on education loan
- Section 80D – Health insurance premium
- Section 80EE/80EEB – Interest on home/EV loans
- Section 80G/80GGA – Donations
- Section 80DDB – Treatment of specified diseases
“Exemptions have been claimed without valid justification,” the CBDT noted. The culprits include employees of MNCs, PSUs, government bodies, academic institutions, and entrepreneurs, many of whom were lured into the scheme with the promise of high refunds for a commission.
Despite a fully digital tax administration system, ineffective communication has allowed many of these scams to go unnoticed. Fraudulent ITR preparers reportedly create temporary email IDs to file bulk returns, which are later abandoned, causing taxpayers to miss official notices.
Reinforcing its principle of “Trust Taxpayers First”, the Department emphasized its preference for voluntary compliance. Over the past year, it has issued SMS and email nudges, advising suspect taxpayers to revise their returns and pay the correct tax.
As a result, around 40,000 taxpayers have updated their returns, voluntarily withdrawing false claims worth ₹1,045 crore in the past four months alone. However, many still remain non-compliant—likely under the influence of the masterminds behind these rackets.
The Department has now signaled stern action, including penalties and prosecution, against continued fraudulent claims. The ongoing verification drive at 150 premises is expected to provide crucial digital evidence that will help dismantle these networks and ensure legal accountability.
Further investigations are underway. Taxpayers are strongly advised to file accurate income details and update communication information, and to avoid falling prey to unauthorized agents promising undue refunds.
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