In a massive crackdown against fraudulent claims of deductions and exemptions, the income tax department on Monday raided, in a coordinated manner, 150 premises across various states of entities facilitating such deductions, especially against donations to political parties and charitable trusts.
The department on Monday said that the raids were conducted after a detailed analysis of the misuse of tax benefits under the Income Tax Act, 1961, often in collusion with professional intermediaries.
Investigations have uncovered organised rackets operated by certain entities and intermediaries which help in filing income tax returns claiming fictitious deductions and exemptions, says the tax department.
“These fraudulent filings involve the abuse of beneficial provisions, with some even submitting false TDS returns to claim excessive refunds,” said the department.
To identify suspicious patterns, the tax department has leveraged financial data received from third-party sources, ground-level intelligence, and advanced artificial intelligence tools.
These findings, says the tax department, are further substantiated by recent search and seizure operations conducted in Maharashtra, Tamil Nadu, Delhi, Gujarat, Punjab, and Madhya Pradesh, where evidence of fraudulent claims was found to have been used by various groups and entities.
Analysis by the department reveals misuse of deductions related to HRA, political donations, education loans, health insurance, contribution to charitable trusts, etc. Employees of MNCs, PSUs, government bodies, academic institutions, and entrepreneurs have been found using these methods to save taxes.
According to the tax department, taxpayers are often lured into these fraudulent schemes with promises of inflated refunds in return for a commission.
“The current round of raids has uncovered evidence suggesting a complex web of fake donation receipts, shell entities operating as political parties, and facilitation agents offering ‘tax planning solutions’ in exchange for hefty commissions,” says Dinkar Sharma, company secretary & partner, Jotwani Associates.
He further says that in many cases, individuals had claimed large deductions for donations to obscure political parties that have little to no presence in the public or electoral domain.
The raids, according to the tax department, are expected to yield crucial evidence, including digital records, that will aid in dismantling the networks behind these schemes and ensure accountability under the law.