The Income Tax Department, leveraging a powerful mix of third-party financial data, on-ground intelligence and artificial intelligence tools, has uncovered a nationwide scam involving bogus claims of tax deductions and exemptions, the Central Board of Direct Taxes (CBDT) revealed in a recent statement.
According to CBDT's official release, issued by V Rajitha, Commissioner of Income Tax (Media and Technical Policy) and official spokesperson, investigations have brought to light well-organised rackets operated by certain ITR preparers and intermediaries who fraudulently filed returns on behalf of taxpayers. These intermediaries facilitated fictitious deductions and exemptions, with some going so far as to submit false TDS returns to secure inflated tax refunds.
AI + Intelligence = Tax Evasion Crackdown
Experts say the I-T Department has been aggressively using AI algorithms in recent years to detect anomalies and patterns in tax filings that suggest fraudulent activity. The AI systems cross-check deduction claims with data sourced from banks, employers, charitable institutions, hospitals, educational bodies and more.
"Artificial intelligence tools, when paired with real-time financial data from third parties, help verify whether donations, loans, or expenses were actually made," said a source close to the investigation. "If such claims match with entities already flagged as suspicious, it fast-tracks detection."
Scam Centres Identified in Gujarat
In the state of Gujarat alone, 15 individuals and entities have come under scrutiny, including suspects from Surat, Ahmedabad, Rajkot, Patan, Bharuch, Gondal, Dhoraji, and Vapi. Officials claim these facilitators helped hundreds and thousands of individuals fraudulently claim tax deductions.
The investigation has revealed widespread misuse of exemptions under key provisions such as:
- Section 10(13A) - House Rent Allowance (HRA)
- Section 80GGC - Donations to political parties
- Section 80E - Interest on education loans
- Section 80D - Health insurance premiums
- Section 80EE & 80EEB - Interest on home loans and electric vehicles
- Section 80G & 80GGA - Donations to charitable and rural development organizations
- Section 80DDB - Medical treatment of specified diseases
Individuals from a cross-section of society - including employees of MNCs, PSUs, government organizations, educational institutions, and even business owners - have been found complicit.
Lure of Commission-Based Refunds
The CBDT notes that taxpayers were lured into these schemes by promises of inflated refunds in return for a small commission. This type of rebate fraud poses a serious threat to revenue collection and undermines the integrity of the tax system.
Taxpayers are strongly advised to avoid middlemen making unrealistic refund promises and to file ITRs through authorized, ethical tax professionals. Authorities have urged citizens to report suspicious tax practices and stay vigilant during the income tax filing season.
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