The Income Tax Department has launched a nationwide crackdown on organised rackets involved in fraudulent claims of deductions and exemptions in Income Tax Returns. The verification operation spans 150 premises and targets individuals and entities—including ITR preparers and intermediaries—who have been systematically misusing provisions under the Income-tax Act, 1961 to claim inflated refunds.
The department’s investigation, powered by advanced artificial intelligence tools, financial data from third-party sources and ground-level intelligence, has revealed abuse of deductions under sections 10(13A), 80GGC, 80E, 80D, 80EE, 80EEB, 80G, 80GGA and 80DDB. Search and seizure operations across Maharashtra, Tamil Nadu, Delhi, Gujarat, Punjab and Madhya Pradesh uncovered widespread submission of false TDS returns and fictitious claims by employees of MNCs, PSUs, government bodies, academic institutions and entrepreneurs.
Taxpayers were reportedly lured into these schemes with promises of excessive refunds in exchange for commissions. In several cases, ITR preparers created temporary email IDs for bulk filings and abandoned them post-submission, leaving official notices unread and complicating department follow-ups.
Despite the availability of a fully e-enabled tax administration system, communication lapses and deliberate obfuscation by racketeers have hampered voluntary compliance. The department has engaged in proactive outreach—via SMS, email and physical awareness campaigns—to nudge suspected filers to revise claims. As a result, 40,000 taxpayers voluntarily updated their returns over the last four months, retracting false claims amounting to ₹10.45 billion.
However, many remain non-compliant and potentially under the influence of these evasion networks. The IT Department has affirmed that continued fraudulent claims will invite stringent penalties and prosecution. The ongoing verification is expected to yield digital evidence that will aid in dismantling the rackets and reinforcing taxpayer accountability.
Officials have urged citizens to file accurate ITRs and avoid falling prey to unauthorised agents promising undue refunds. The enforcement action underscores the government’s intent to uphold transparency and integrity in India’s tax system.
