Mitali
Many taxpayers are misusing ITR only to claim refunds on TDS from salary, winnings or other income, viewing it as "refund-taking machine" and this behaviour is likely to result in strict scrutiny and income tax notices in 2025.
A large number of people are filing Income Tax Returns with an aim of getting maximum refunds, even if those refunds are not genuine as per the Income Tax Act.
Because of this pattern, the department is increasingly flagging such returns for deeper verification - especially if deductions or refund amounts seem unusually high. These can undergo manual or automated checks, slowing processing and can lead to demand notices, penalties and further questioning.
How people misuse refunds?
Some taxpayers claim excessive TDS refunds, wrong deductions or inflated losses only to increase the refund amount.
In some of the cases have seen that many taxpayer do not have proper documents nor a genuine tax position to support what is shown in the return, which becomes risky once the case is picked for scrutiny.
Income Tax Notice 2025 risk
The tax department is now using data analytics and AIS/26AS matching more aggressively to identify abnormal refund patterns. If information in the ITR doesn't match official records such as Form 26AS, TDS/TCS, bank account details, or PAN-Aadhaar linking, the system may automatically trigger a notice or seek clarification from the taxpayer.
Compliance to Avoid Penalties
Revise ITR immediately if claims are not genuine:
- Check AIS for mismatches (winnings, high-value transactions).
- File correct form, report all sources of income, pay due tax accurately.
- Claim only those deductions and exemptions that are allowed and properly documented.
- Revise by 31 Dec 2025 deadline.
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