The Income Tax Department is cracking down on false tax exemptions being claimed by people in their Income Tax Returns. Most of these exemptions, under the old income tax regime, are for individuals who earn over Rs 20 lakh.
The tax authorities have identified many instances of false exemption claims submitted by taxpayers, leading to enhanced risk evaluation procedures at the Central Processing Centre to stop incorrect refund disbursements, according to an ET report.
The tax authority has implemented computerised verification systems to examine taxpayers previously identified for filing inflated claims. The department has enhanced its utilisation of sophisticated data analysis and AI technologies to detect inconsistencies in income declarations by individuals.
ITR filing: What false exemptions claims are being scrutinized?
The fraudulent exemption claims comprise fabricated medical expenses and fictitious donations to political and religious entities, with a significant portion of these claims originating from taxpayers who opted for the old tax structure.
Sources knowledgeable about the matter told ET that the attempted tax avoidance through these deceptive practices amounts to approximately ₹700 crore.
The processing of refunds might experience delays, particularly for claims exceeding Rs 10 lakh, according to these sources.
“During the verification process, we detected that many taxpayers, mostly with income above Rs 20 lakh, were claiming wrongful refunds through fake exemptions. Interestingly, most of them were repeat offenders,” a senior tax official was quoted as saying.
Tax officials have confirmed that notifications are being dispatched to taxpayers, enabling them to amend their returns.
“This verification is taking additional time, a reason why the refund process is slower compared to last year,” the official said, adding that the department is closely monitoring the processing so that other pending income tax returns are cleared at the earliest.
According to recent data, the Income Tax Department’s refund disbursements decreased by 24% to Rs 1.60 lakh crore as of September 17, compared to Rs 2.10 lakh crore in the previous year.
The department launched comprehensive verification exercises across multiple sites in July, targeting those who were helping others file incorrect tax deductions and exemptions in their returns.
Following a recent compliance campaign as of June 18, taxpayers withdrew tax deduction claims amounting to Rs 963 crore and submitted additional taxes of Rs 409.50 crore. Additionally, 30,161 taxpayers disclosed foreign assets valued at Rs 29,208 crore and foreign income totalling Rs 1,089 crore.
Source #TOI
