The Income Tax Department started a massive verification initiative on July 14, 2025, targeting numerous hubs around the nation to uncover people and organizations behind the strained fraudulent claims of deductions and exemptions in Income Tax Returns (ITR). This action follows the in-depth study conducted on the abuse of tax benefits from the Income Tax Act of 1961, which is frequently in collaboration with professional middlemen. The investigation has revealed an intricate scheme operated by specific ITR preparers and middlemen that were filing returns with claims of fictitious deductions and exemptions. Refunds are also being fraudulently claimed through the submission of false TDS returns. The misuse of beneficial provisions gives rise to these erroneous submissions, with some going so far as to file false TDS returns to receive significantly greater refunds than entitled to. To detect conspicuous patterns, the department has utilized financial data received from outside sources, on-the-ground informants, and advanced artificial intelligence systems. Evidence gathered from search-and-seizure operations in Maharashtra, Tamil Nadu, Delhi, Gujarat, Punjab, and Madhya Pradesh suggesting the existence of an organized claim and refund conspiracy has enabled the department to corroborate these findings.Widespread deduction abuse happening on a large scale.Data indicates that deductions under the sections 10(13A), 80GGC, 80E, 80D, 80EE, 80EEB, 80G, 80GGA and 80DDB are being misused. Justifications are not provided for the exemptions that are claimed. This involves employees from multinational companies, public sector undertakings, other government bodies, private educational institutions, and even entrepreneurs. These schemes, while fabricated, are enticing enough whereby taxpayers are offered fraudulent deductions for a commission which serves as a lure into the schemes. False claims withdrawal by 40k taxpayers. In the past year, the department has made attempts to communicate with users through SMS and Email to guide taxpayers to correct their returns and pay the right dues. In addition, several physical outreach programs have been implemented. These measures have resulted in approximately 40,000 taxpayers updating their returns and withdrawing claims in the last four months, resulting in the retraction of ₹1045 crore worth of claims. Despite these measures, it appears that a huge number of individuals continue to evade compliance under the influence of the masterminds behind the tax evasion schemes.Your lack of improvement is leading me toward a firm decision.The consequences will be dire for the ongoing false claim submissions - fines and even legal action, if necessary. These actions come in light of the active inquiry in 150 locations which will likely produce digital evidence essential in exposing the culprits within these schemes and legal implications will be rendered as required. Additional inquiries are being conducted. For the last time, correct and factual income details and communications should not be influenced by unauthorized agents who promise unwarranted refunds.
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