The Income Tax Department has uncovered organised rackets across India involving returns preparers and intermediaries who have been filing income-tax returns (ITRs) on behalf of clients to fraudulently claim exemptions and refunds. These claims have been made on behalf of employees in multinational companies, public sector undertakings (PSUs), government bodies, academic institutions, and entrepreneurs.
According to the Finance Ministry, the department is now intensifying its efforts to take strong action against these fraudulent activities, including imposing penalties and pursuing prosecution wherever applicable.
The ongoing verification exercise, which spans 150 locations across the country, is expected to yield crucial evidence, including digital records. This operation is aimed at dismantling the networks behind these fraudulent schemes and ensuring that those responsible are held accountable under the law.
Further investigations are ongoing, with taxpayers being urged to ensure they file correct details in their returns and avoid falling for offers of undue refunds from unauthorised agents.
The fraudulent schemes involve the misuse of tax benefits under the Income-tax Act, 1961, with some ITR preparers even submitting false tax deducted at source (TDS) returns to claim excessive refunds. To catch these schemes, the Income Tax Department has combined financial data from third-party sources, ground-level intelligence, and advanced AI tools.
Evidence of these fraudulent claims has been discovered during recent search operations in states like Maharashtra, Tamil Nadu, Delhi, Gujarat, Punjab, and Madhya Pradesh.
Taxpayers who have been involved in these schemes are often lured by promises of inflated refunds in exchange for a commission. However, many such ITR preparers operate in a way that makes it difficult for taxpayers to receive proper communication from the department. They often create temporary email addresses for bulk filings, which are later abandoned, leading to official notices going unread.
The department's efforts have been showing some positive results. In the past four months alone, around 40,000 taxpayers voluntarily updated their returns, withdrawing false claims amounting to ₹1,045 crore. However, many taxpayers still remain non-compliant, possibly under the influence of those orchestrating these evasion schemes.
The government continues to encourage voluntary compliance, and with more awareness, it is hoped that more taxpayers will take the initiative to file accurate returns and avoid falling prey to fraudulent schemes.