Income Tax Department Launches Nationwide Crackdown on Fake Deductions and Exemptions
On 14th July 2025, the Income Tax Department initiated a large-scale verification drive across multiple states to tackle fraudulent claims of deductions and exemptions in ITR filings. The crackdown targets organized rackets involving tax intermediaries and ITR preparers misusing provisions under the Income-tax Act, 1961.
Using advanced AI tools, third-party data, and intelligence inputs, the Department uncovered widespread misuse of sections like 10(13A), 80C, 80D, 80G, 80GGC, among others. Fraudulent filings were often supported by false TDS returns and temporary email IDs to evade detection.
Search operations in Maharashtra, Tamil Nadu, Delhi, Gujarat, Punjab, and Madhya Pradesh revealed systemic abuse involving salaried employees, entrepreneurs, and professionals.
Despite ongoing outreach efforts, including SMS/email nudges and physical programs, many taxpayers remain non-compliant. However, 40,000 individuals have voluntarily revised their returns, withdrawing ₹1,045 crore in false claims.
The Department has reiterated its focus on voluntary compliance but warned of strict penalties and prosecution for continued misuse. Taxpayers are urged to file accurate returns and avoid unauthorized agents offering inflated refunds.
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