Income Tax Department cracks down False Deduction Claims in ITRs

The Income Tax Depart­ment has launched a mas­sive ver­i­fi­ca­tion dri­ve across India to crack down on bogus claims of deduc­tions and exemp­tions made in Income Tax Returns (ITRs). This comes after it was found that many peo­ple, with the help of unscrupu­lous agents and return fil­ers, are wrong­ly claim­ing deduc­tions to get high­er refunds.

What’s the Issue?

• Some ITR pre­par­ers and agents are run­ning fraud­u­lent rackets.
• They are help­ing tax­pay­ers file fake claims under var­i­ous deduc­tion sec­tions like: 
  • Sec­tion 10(13A) – House Rent Allowance (HRA)
  • Sec­tion 80GGC – Dona­tions to polit­i­cal parties
  • Sec­tion 80E – Inter­est on edu­ca­tion loans
  • Sec­tion 80D – Med­ical insurance
  • Sec­tion 80EE / 80EEB – Inter­est on hous­ing or elec­tric vehi­cle loans
  • Sec­tion 80G / 80GGA – Dona­tions to char­i­ta­ble institutions
  • Sec­tion 80DDB – Treat­ment for spec­i­fied diseases

These claims are often fake or inflat­ed, made only to get big­ger refunds, and many tax­pay­ers are lured in with promis­es of easy mon­ey in exchange for a commission.

How the Scam Works

• Fraud­sters cre­ate fake doc­u­ments or declare false expenses.
• Some even file returns with fake TDS (Tax Deduct­ed at Source).
• They use tem­po­rary email IDs, so the tax­pay­er nev­er sees notices or updates.
• Once filed, these ITRs may show big refunds, but the fraud comes to light dur­ing verification.

What the Income Tax Depart­ment is Doing

• The IT Depart­ment is using: 
  • AI tools
  • Data from banks and institutions
  • Ground-lev­el intelligence
• Raids have been con­duct­ed in Del­hi, Maha­rash­tra, Gujarat, Tamil Nadu, Pun­jab, and Mad­hya Pradesh.
• Over 150 places are under ver­i­fi­ca­tion, and dig­i­tal evi­dence is being collected.
• Peo­ple from MNCs, gov­ern­ment jobs, PSUs, and even small busi­ness­es are involved.

Advi­so­ry to Taxpayers

• Do NOT trust unau­tho­rised agents who promise high refunds.
• Always give cor­rect details of your income and deductions.
• Use your own email ID and mobile num­ber when fil­ing returns.
• If you’ve filed incor­rect infor­ma­tion, revise your return immediately.

Vol­un­tary Com­pli­ance Pays Off

Thanks to the IT Department’s aware­ness efforts (emails, SMS, camps), about 40,000 tax­pay­ers have already cor­rect­ed their returns and paid back ₹1,045 crore in the last four months.

But many are still not com­pli­ant — and strict action includ­ing penal­ties and legal pros­e­cu­tion may follow.

Key Take­aways for Taxpayers

What You Should Do	What You Should Avoid
File cor­rect ITR	Claim­ing fake deductions
Use your own con­tact details	Let­ting agents use tem­po­rary emails
Con­sult autho­rised professionals	Falling for refund promises
Revise incor­rect ITRs immediately	Ignor­ing Income Tax notices

Remem­ber: The Income Tax Depart­ment fol­lows the mot­to “Trust Tax­pay­ers First”, but fraud will not be tol­er­at­ed. Be hon­est, stay informed, and don’t get caught in scams.