Income Tax

Date: 14th July 2025
Source: Central Board of Direct Taxes (CBDT), Ministry of Finance, Government of India

Overview

In a significant move to combat tax evasion, the Income Tax Department initiated a nationwide verification operation on 14th July 2025 to investigate fraudulent claims of deductions and exemptions in Income Tax Returns (ITRs). This operation, conducted across more than 150 locations in India, aims to uncover rackets involving false filings and to ensure stricter compliance with the Income-tax Act, 1961.

Key Highlights of the Operation

• ✅ Targeted individuals, intermediaries, and ITR preparers involved in fraudulent claims of deductions and exemptions.

• ✅ Over ₹1,045 crore worth of false claims have been voluntarily withdrawn by taxpayers in the last four months.

• ✅ Analysis exposed organized syndicates operating in states like Delhi, Gujarat, Punjab, Maharashtra, Tamil Nadu, and Madhya Pradesh.

• ✅ Advanced tools such as AI-powered analytics, third-party financial data, and ground-level intelligence were used to detect suspicious patterns.

Commonly Abused Dedication Sections Identified

The department observed rampant misuse of the following sections:

• Section 10(13A) – House Rent Allowance

• Section 80GGC – Donations to Political Parties

• Section 80E – Education Loan Interest

• Section 80D – Health Insurance

• Section 80EE / 80EEB – Housing and Electric Vehicle Loan Interest

• Section 80G / 80GGA – Donations

• Section 80DDB – Medical Treatment for Specified Diseases

In many cases, deductions were claimed without valid documentation or under fictitious circumstances.

Modus Operandi of Fraudsters

The investigation revealed that:

• Certain ITR filing agents and intermediaries were filing returns using fake deduction entries to secure inflated refunds.

• These agents often use temporary email IDs to file bulk returns, and then abandon the accounts, causing taxpayers to miss important notices.

• Innocent taxpayers, including employees of MNCs, PSUs, and academic institutions, were lured by refund promises in exchange for commissions.

Department’s Response & Outreach

As part of its principle of ‘Trust Taxpayers First’, the department emphasized voluntary compliance through:

• SMS & Email Advisories urging taxpayers to revise their returns.

• Physical outreach events on and off campuses.

• AI-based notices and real-time alerts.

Over 40,000 taxpayers have already corrected their returns after receiving nudges and advisories.

What’s Next?

The Income Tax Department has announced that:

• Strict penalties and prosecution will be imposed on those found guilty.

• Digital evidence from the ongoing raids will be crucial in breaking the nexus of intermediaries.

• Further investigations are underway, with a focus on dismantling these tax evasion rackets.

Advisory for Taxpayers

Taxpayers are strongly advised to:

• Always file genuine returns with correct income and deduction details.

• Avoid unauthorized tax agents or intermediaries offering “guaranteed refunds.”

• Regularly check the status of their ITR filings and respond to notices promptly.

Final Words

This crackdown serves as a strong warning to those misusing the system. While the Income Tax Department continues to promote voluntary compliance, it is equally committed to ensuring that the law is upheld, and defaulters are brought to justice.

For genuine tax support or legal advisory, always consult qualified professionals.

📞 Need expert assistance? Contact Vidhu Duggal & Company or your registered tax professional today.