Income Tax Department Addresses Bogus Claims of Deductions and Exemptions
The Income Tax Department has launched a nationwide verification operation aimed at curbing fraudulent claims of deductions and exemptions in Income Tax Returns (ITRs). This initiative comes after a thorough investigation revealed organized rackets involving intermediaries who have been filing false claims. The department is utilizing advanced technology and intelligence to identify suspicious activities, with a focus on ensuring compliance and accountability among taxpayers.
Operation Details and Findings
The Income Tax Department’s verification operation spans multiple states, including Maharashtra, Tamil Nadu, Delhi, Gujarat, Punjab, and Madhya Pradesh. This extensive effort targets individuals and entities that have been facilitating fraudulent tax claims. Investigators have uncovered a network of ITR preparers who exploit beneficial provisions of the Income-tax Act, 1961, by submitting fictitious deductions and exemptions. Some of these preparers have even gone as far as filing false Tax Deducted at Source (TDS) returns to secure unwarranted refunds.
To combat these fraudulent activities, the department has employed financial data from third-party sources, ground-level intelligence, and artificial intelligence tools. Recent search and seizure operations have provided substantial evidence of these fraudulent claims, highlighting the need for stringent measures against such practices. The department’s findings indicate that various sections of the tax code, including sections 10(13A), 80GGC, and 80D, have been misused, with many taxpayers being lured into these schemes by promises of inflated refunds in exchange for a commission.
Taxpayer Compliance and Outreach Efforts
In line with its commitment to fostering voluntary compliance, the Income Tax Department has undertaken significant outreach initiatives over the past year. These efforts include sending SMS and email advisories to suspected taxpayers, encouraging them to amend their returns and pay the correct taxes. The department has also organized physical outreach programs to engage with taxpayers directly. As a result of these initiatives, approximately 40,000 taxpayers have voluntarily updated their returns in the last four months, withdrawing false claims totaling ₹1,045 crore.
Despite these efforts, many taxpayers remain non-compliant, potentially influenced by the masterminds behind the fraudulent schemes. The department emphasizes the importance of accurate reporting and urges taxpayers to avoid relying on unauthorized agents who promise undue refunds. The ongoing verification operation aims to address these issues and promote a culture of compliance among taxpayers.
Future Actions and Consequences
The Income Tax Department is prepared to take decisive action against individuals and entities that continue to submit fraudulent claims. This includes imposing penalties and pursuing prosecution where necessary. The current verification exercise, which involves inspections at 150 premises, is expected to uncover critical evidence, including digital records that will help dismantle the networks behind these fraudulent activities.
As investigations continue, the department remains vigilant in its efforts to uphold the integrity of the tax system. Taxpayers are once again reminded to provide accurate information regarding their income and communication details. The department warns against the risks of engaging with unauthorized intermediaries who may offer misleading advice regarding tax refunds.
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