The Income Tax Department has intensified scrutiny of income tax returns this time, leading approximately 40,000 individuals to withdraw their claims. Over the past four months, taxpayers themselves have cancelled fraudulent claims worth ₹1,045 crore through revised returns. The department states that extensive tax fraud has been detected through strict scrutiny and the use of technical tools.
Taxpayers Alarmed by Income Tax Department's Warning
In an official statement released on Monday, the Income Tax Department revealed that action against fraudulent deductions and exemptions has been accelerated. This has caused a stir across the country. A large number of taxpayers are now filing revised returns to avoid legal action. The department clarified that it is not acting on general errors but focusing on organized fraud.
Areas with the Most Action
The Income Tax Department's investigation found that some tax consultants and middlemen were misleading people by offering fake refunds in exchange for commissions. Raids were conducted in states like Maharashtra, Gujarat, Delhi, Punjab, Tamil Nadu, and Madhya Pradesh. Organized rackets in these areas were promising taxpayers large refunds based on fake documents.
How the Tax Fraud Works
Investigations revealed that some return filers were making false entries in Section 80C, 80D, 10(14), HRA, and other deductions for their commission. In some cases, irregularities were also found in medical expenses and LTA claims. Taxpayers were told that including such claims in their returns would give them a higher refund. Many made such claims without proper verification and now find themselves in trouble.
Imprisonment Possible Under Sections 271 and 276
Under the Income Tax Act, 1961, if a taxpayer intentionally evades tax or makes false claims, they may be subject to a heavy penalty under Section 271. Additionally, under Section 276, imprisonment ranging from 6 months to 7 years can be imposed depending on the severity of the fraud. The tax department has stated that it will not tolerate any leniency in such cases.
Preparation to Seize Assets in Some Cases
Upon detection of fraud, the Income Tax Department has not only accelerated the process of imposing penalties but has also taken steps such as seizing assets, freezing bank accounts, and halting transactions in serious cases.
Why the ITR Filing Deadline Was Extended
The CBDT extended the last date for income tax filing from July 31, 2025, to September 15. This aims to provide relief to honest taxpayers, but the department is also using the additional time to identify and take action against fraud.
IT Department's Focus Now on Audit Reports and TDS
Currently, the department is scrutinizing returns where significant discrepancies have been found in TDS claims and audit reports. Such cases are being automatically scrutinized by the system, not manually. Department sources say that even larger-scale fraud may come to light in the future.
It's Now Difficult to Escape; Technology Has Accelerated the Pace of Detection
As the tax department increases its use of technology, the detection of tax-related trickery by taxpayers is also happening faster. All entries in tax returns are being cross-checked with bank statements, Form 26AS, AIS, and GST data.
New Awareness Regarding Tax Compliance in the Country
Although a large number of people still take shortcuts to avoid taxes, a new awareness is also emerging due to the department's ongoing investigations and actions. Taxpayers are now more cautious and are filing after verifying their information.
