In Lok Sabha, the Minister of State in the Ministry of Finance, Shri Pankaj Chaudhary, answered Unstarred Question No. 2494 on Monday, 3 August 2026/12 Shravana, 1948 (Saka), on “Cases of Wrongful Tax Relief Claims.” The question was raised by Adv. K. Francis George, Member of Parliament.
The Minister informed the House that the Income Tax Department has detected cases involving wrongful tax relief claims and non-genuine deductions during the last five years. Such cases were identified through data analytics and verification exercises and were further corroborated through search and survey operations against entities, professional intermediaries and other persons suspected of facilitating fraudulent claims.
These enforcement actions resulted in the recovery of evidence relating to tax evasion and other violations of the Income-tax Act, 1961. Appropriate action has been taken on the basis of the evidence gathered and in accordance with the applicable provisions of the Income-tax law.
In-house data analytics system strengthens detection of tax evasion
CBDT has implemented an in-house data analytics system that assimilates and analyses information and transactional data received from multiple third-party sources. These include Statements of Financial Transactions, Tax Deduction at Source and Tax Collection at Source statements, GST data, information on high-value transactions from banks and financial institutions, and details of the purchase and sale of immovable property received from registration authorities.
Risk rules are formulated through systematic and identity-blind analysis of information from Income-tax Returns, tax audit reports, third-party filings and data received from other law-enforcement agencies. Returns and transactions displaying characteristics indicative of possible tax evasion are flagged for further examination.
The formulation of risk rules is a dynamic process, with the rules being continually calibrated and refined to improve the identification of potentially incorrect claims, non-reporting of income or assets and other tax-related discrepancies.
NUDGE campaigns promote preventive and non-intrusive compliance
CBDT has undertaken NUDGE—Non-intrusive Usage of Data to Guide and Enable—campaigns as technology-driven measures for improving tax compliance and collection efficiency. These campaigns combine data analytics, legislative enablement, behavioural insights and digital communication to shift the focus from post-facto enforcement to preventive, technology-enabled and non-intrusive compliance.
The NUDGE campaigns are implemented through the seven-stage SAKSHAM strategy:
Sankalan involves systematic compilation of data and information from diverse sources, while Anusandhan focuses on research, analysis and generation of insights for risk identification. Kriyanvyan converts these insights into actionable interventions, and Sampark enables proactive communication for creating awareness and guiding taxpayer behaviour.
Hastak provides handholding and facilitation to taxpayers in fulfilling their obligations. Adhikaar seeks to protect taxpayer rights, promote transparency and foster trust and fairness, while Mulyankan provides for continuous monitoring and evaluation to measure outcomes and refine subsequent action.
Under these campaigns, communications are sent to selected taxpayers after risk analysis, advising them to review and, wherever required, revise or update their previously filed Income-tax Returns. Taxpayers are selected on the basis of advanced analysis indicating possible non-reporting or incorrect reporting of income or assets, or excess claims of deductions and exemptions.
The campaigns have also been supported by nationwide outreach programmes involving employers and other stakeholders. These programmes encourage taxpayers to voluntarily correct discrepancies by filing revised, belated or updated returns.
Significant outcomes of SAKSHAM NUDGE campaigns
During Financial Years 2024-25 and 2025-26, the SAKSHAM NUDGE campaigns resulted in the filing of 1.25 crore updated or revised Income-tax Returns.
The taxpayers covered by these campaigns paid additional tax of ₹9,493.66 crore, while the overall revenue impact of the campaigns was reported at ₹12,121.91 crore.
Inter-agency coordination enhanced
CBDT proactively shares information with other law-enforcement agencies through the Regional Economic Intelligence Councils and the Nodal Officer mechanism.
Information is also exchanged between CBDT and agencies such as the Central Board of Indirect Taxes and Customs. Relevant information may be shared automatically, on request or on a suo motu basis, depending on the requirements of the concerned department, agency or organisation.
Action against entities and professional intermediaries
Through investigations and data analytics, the Income Tax Department has identified categories of entities and intermediaries involved in facilitating fraudulent claims, including tax-return preparers and chartered accountants.
Actions taken in such cases include NUDGE campaigns, e-verification, search-and-seizure and survey operations, assessments and reassessments, imposition of penalties and prosecution.
Appropriate information relating to tax professionals has also been shared with the relevant regulatory and enforcement organisations, including the Institute of Chartered Accountants of India, for necessary action.
The Minister further stated that fixing accountability for lapses by officials is a continuous and ongoing process. Whenever a lapse is detected, appropriate action against the official concerned is taken in accordance with the applicable rules.
Corrective measures to prevent recurrence
CBDT has strengthened the pre-filling of information in Income-tax Returns and validations undertaken at the return-processing stage. The Department also verifies mismatches between information reported by taxpayers and data furnished by various reporting entities.
Cases involving possible wrongful claims are detected through data analytics, e-verification and other technology-enabled tools. Depending on the evidence and circumstances, further action may include searches, surveys, assessments, reassessments, penalties and prosecution.
These measures are aimed at strengthening digital tax compliance, facilitating voluntary correction, detecting fraudulent claims at an early stage and protecting government revenue while maintaining a non-intrusive and taxpayer-oriented compliance framework.
The answer can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2026/08/LS-Cases-of-Wrongful-Tax-Relief-Claims-03.08.2026.pdf
