Income Tax Dept Detects Rs.1,070 Crore in Incorrect Claims by 90,000 Individuals

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Income Tax Dept Detects ₹1,070 Crore in Incorrect Claims by 90,000 Individuals

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As many as 90,000 taxpayers, including individuals, have withdrawn wrongful tax claims and paid additional taxes following an Income Tax department initiative targeting incorrect claims, according to a source familiar with the matter. This withdrawal has resulted in an extra payment of approximately ₹1,070 crore for the fiscal years 2023, 2024, and up to December 2024 in 2025.

For individuals, wrongful claims have been identified in deductions related to investments such as purchasing insurance policies and paying for health insurance. In the case of enterprises, incorrect claims have been found among units in Special Economic Zones (SEZs), the source added. Queries sent to the finance ministry and the Central Board of Direct Taxes (CBDT) on Thursday for comments on this matter went unanswered at the time of publishing.

Incorrect deductions:

The individual mentioned earlier noted that through various search and seizure operations and surveys conducted by the tax department, it has been revealed that many individuals have been claiming incorrect deductions under section 80 of the Income Tax Act in their tax returns. This has resulted in a decrease in the tax owed to the government. Investigations also uncovered that these individuals were employees of organizations across different sectors, including public sector enterprises, large companies, multinational corporations, LLPs, and private limited companies. Furthermore, the department’s checks indicated that “some dishonest individuals have misled taxpayers into claiming incorrect deductions or refunds,” according to the source.

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Conducting outreach programs:

The tax department has been organizing outreach programs with employers to raise awareness about the implications of incorrectly claiming deductions on income tax returns and the steps taxpayers can take to correct these mistakes. Taxpayers have the option to amend their return forms by paying an additional tax to fix errors within two years from the end of the relevant assessment year, specifically for assessment years 2022-23 to 2024-25. To enhance efforts in encouraging voluntary tax compliance and minimizing disputes, a new outreach program with employers is being introduced. Deductions under section 80 are designed to encourage particular investments, savings, and expenditures, which help lower the taxable income and tax obligations for individuals and businesses. Additionally, SEZ units receive tax benefits with certain conditions to boost exports. The department aims to ensure that these advantages are not improperly claimed.

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