Income tax department On July 14, 2025, a large -scale verification operation started in many places across the country, aimed at identifying people and institutions promoting fake claims of cuttings and discounts in the Income Tax Return (ITR). The action has been taken after a detailed analysis of misuse of tax benefits under the Income Tax Act, 1961, which is often in connivance with professional middlemen. The investigation exposed the organized racket run by some ITRs and middlemen, who were filing returns, claiming fake cuttings and discounts.
Fake TDS returns are also being filed for refund
These fake admissions include misuse of beneficial provisions, even some people submit fake TDS returns to claim too much refund. To identify the suspected pattern, the department has availed the third-party source, ground-level intelligence information and financial data received from advanced artificial intelligence tools. Recently conducted and seizure actions in Maharashtra, Tamil Nadu, Delhi, Gujarat, Punjab and Madhya Pradesh confirm these conclusions, where evidence of fraud claims was used by different groups and institutions.
The misuse of cuttings is being done on a large scale
Analysis suggests that the cuttings are being largely misused under section 10 (13A), 80GGC, 80E, 80D, 80ee, 80EB, 80G, 80GGA and 80DDB. Rebate has been claimed without any valid justification. Employees of multinational companies, public undertakings, government bodies, educational institutions and entrepreneurs are also included. Taxpayers are often implicated in these fraudulent schemes by promising to exaggerate refunds in exchange for commission.
40,000 taxpayers withdraw false claims
In the last one year, the department has tried to contact with taxpayers via SMS and email to motivate the suspected taxpayers to improve their returns and pay the right tax. Along with this, several physical contact programs have also been organized. As a result, around 40,000 taxpayers have updated their returns in the last 4 months and voluntarily withdrew false claims worth ₹ 1045 crore. However, many people are still not complying with the rules under the influence of the mastermind of the tax evasion racket.
Strict action will be taken if not improved
The department is now ready to take strict action against continuous fraud claims, including punishment and prosecution wherever applicable. The ongoing verification drive in 150 complexes is expected to provide important evidence including digital records, which will help demolish the network behind these schemes and ensure accountability under the law. Further investigation is still going on. The department has again advised taxpayers not to enter the correct details of their income and communication and not affect the advice of unauthorized agents or middlemen who promise wrong refunds.
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