Fraud crackdown: 40,000 taxpayers withdraw bogus claims of ₹1,045 crore

I-T dept said move came after a series of outreach efforts, including SMS alerts, emails, and physical programmes, were made across various locations, nudging taxpayers towards voluntary compliance

Around 40,000 taxpayers have revised their income tax (I-T) returns in the past four months, withdrawing fraudulent claims worth ₹1,045 crore following a large-scale crackdown by the I-T department on bogus deductions and exemptions, the Central Board of Direct Taxes (CBDT) said on Monday.

 

The I-T department said the move came after a series of outreach efforts, including SMS alerts, emails, and physical programmes, were made across various locations, nudging taxpayers towards voluntary compliance.

 

CBDT initiated a large-scale verification operation across multiple locations in the country on Monday, targeting individuals and entities facilitating fraudulent claims of deductions and exemptions in Income Tax Returns (ITRs). This action follows a detailed analysis of the misuse of tax benefits under the Income-tax Act, 1961, often in collusion with professional intermediaries.

 

“Investigations have uncovered organised rackets operated by certain ITR preparers and intermediaries, who have been filing returns claiming fictitious deductions and exemptions. These fraudulent filings involve the abuse of beneficial provisions, with some even submitting false TDS returns to claim excessive refunds,” CBDT said in a statement.

 

The tax department's analysis reveals rampant misuse of deductions under sections 10(13A), 80GGC, 80E, 80D, 80EE, 80EEB, 80G, 80GGA, and 80DDB. Exemptions have been claimed without valid justification. Employees of multinational companies (MNCs), public sector undertakings (PSUs), government bodies, academic institutions, and entrepreneurs are among those implicated. 

 

“Taxpayers are often lured into these fraudulent schemes with promises of inflated refunds in return for a commission,” the department said in a press release. It flagged that despite India’s fully e-enabled tax administration system, “ineffective communication remains a significant hurdle in assisting taxpayers”.

 

“To identify suspicious patterns, the department has leveraged financial data received from third-party sources, ground-level intelligence, and advanced artificial intelligence (AI) tools. These findings are further substantiated by recent search and seizure operations conducted in Maharashtra, Tamil Nadu, Delhi, Gujarat, Punjab, and Madhya Pradesh, where evidence of fraudulent claims was found to have been used by various groups and entities," the CBDT stated.

 

Despite these efforts, officials noted that many taxpayers remain under the influence of organised rackets operated by certain intermediaries and ITR preparers, who promise inflated refunds in return for commissions. These rackets often file returns using temporary email IDs, which are later abandoned, resulting in official notices going unread.

 

The department has warned of tough measures, including penalties and prosecution wherever applicable, against those who continue to make fraudulent claims. Verification operations are underway across 150 premises.

 

Taxpayers have been advised to file accurate particulars of their income and contact details, and not to fall prey to agents or intermediaries promising undue refunds. Further investigations are in progress.