Quick Summary
The Income Tax Department has uncovered a large-scale scam involving fraudulent refund claims by Indian taxpayers who falsely declared themselves as foreign citizens during IT return filing. The scam exploited a loophole in the online filing system that allowed Indian citizens to claim tax exemption
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FAQ :
Indian taxpayers falsely declared themselves as foreign citizens during the income tax return filing process to claim fraudulent refunds.
Section 10(6) of the Income Tax Act was misused. This section provides tax exemptions specifically for foreign nationals and diplomatic staff working in India.
The fraud came to light after a raid in Gondia, Maharashtra, where a local tax preparer was found assisting clients in falsely claiming foreigner status.
The department is implementing tighter system controls, urging upgrades to the Central Processing Centre's system, and recommending firewalling the return processing system to automatically flag Indian citizens selecting foreign national options.
Over 2,000 income tax returns were investigated within the Nagpur Chief Commissionerate jurisdiction.
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