A big scam involving income-tax refunds was busted by taxmen here, after scores of I-T returns were filed by salaried individuals declaring themselves as foreign citizens. Earnings of foreign nationals in India and staffers in diplomatic missions are exempt from tax on several counts.
The scamsters used a loophole in the online filing system and clicked the option for non-Indian citizens and claimed exemptions under this category. After the wake-up call, the income tax department is mending the systems to bar Indian citizens from clicking on the option at the time of filing returns, said sources.
The first link was unearthed following a raid in Gondia town, where a small-time tax professional assisting people in filing returns was found to have manipulated the system in this way. This led to a probe on as many as 2,000 IT returns, triggering nationwide scrutiny, said sources. The exact amount of tax evaded from the modus operandi is yet to be ascertained, said sources.
Section 10(6) of the Income Tax Act and its clauses deal with exemptions for foreign citizens and embassy staffers. Fraudulent exemptions were claimed by local taxpayers by clicking on options available under this Section of the Income Tax Act. In some cases, a simpler method was adopted. There is an ‘any other’ option in the drop-down menu, which was clicked to claim sizable deductions from the tax liability. The returns were filed by taxpayers in the jurisdiction of Nagpur chief commissionerate of income tax department, which covers Vidarbha and Marathwada regions of Maharashtra.
The probe alerted the tax department and suggestions were made to the Central Processing Centre (CPC) to set up security checks, including automatic firewalling of I-T returns by Indian citizens who select the foreign citizens’ option in the menu, said sources. The new suggestions to CPC call for barring returns for Indian citizens if exemptions under Section 10 (6) or its relevant clauses are claimed.
Source #TOI
