CBDT Alerts Taxpayers Against Fraudulent Deduction Claims
CBDT Alerts Taxpayers Against Fraudulent Deduction Claims Through Data-Driven Monitoring
The Central Board of Direct Taxes (CBDT) has intensified its efforts to curb fraudulent deduction and exemption claims under the Income-tax Act, 1961, particularly those relating to donations made to political parties and charitable trusts.
Action Against Fraudulent Intermediaries
Recent enforcement actions by the Income Tax Department revealed that certain intermediaries were filing income tax returns with false deduction claims on a commission basis. These intermediaries had created a nationwide network of agents to facilitate bogus claims, resulting in tax evasion and wrongful refunds.
Investigations found that large-scale fraudulent deductions were being claimed in the name of donations to Registered Unrecognised Political Parties (RUPPs) and certain charitable institutions. Many of these entities:
- Did not file income tax returns
- Were not operating from their registered addresses
- Were not engaged in any genuine political or charitable activity
Evidence gathered during searches indicated that such entities were being misused as conduits for fund transfers, hawala transactions, cross-border remittances, and for issuing fake donation receipts.
Focus on Sections 80G and 80GGC
CBDT’s data analytics has identified high-risk behaviour among taxpayers claiming deductions under:
- Section 80G (donations to charitable institutions), and
- Section 80GGC (donations to political parties)
Analysis revealed that several taxpayers claimed deductions without verifying the authenticity of recipient entities or providing adequate supporting details.
Revision of Returns and NUDGE Campaign
As part of a data-driven compliance initiative, CBDT has launched a targeted “NUDGE” campaign to help taxpayers voluntarily correct their returns.
- A significant number of taxpayers have already revised their returns for AY 2025-26
- Many have also filed updated returns for earlier assessment years
Under this campaign, SMS and email alerts are being sent from 12 December 2025 to taxpayers whose returns reflect potentially incorrect deduction claims. These communications provide an opportunity to withdraw wrong claims and update returns without facing harsher enforcement action.
Advisory to Taxpayers
Taxpayers are advised to:
- Ensure correct mobile number and email ID are registered with the Income Tax Department
- Verify the genuineness of donation recipient entities before claiming deductions
- Maintain proper documentation to substantiate claims
Detailed guidance on deduction provisions and the process for filing updated returns is available on the official Income Tax portal:
www.incometax.gov.in
Also Read:
- Recommendations of the 55th Meeting of the GST Council
- Changes in GST and Income Tax during the Financial Year 2024-25
- TDS and TCS provisions applicable from April 1, 2025
- Rationalizing TDS: A Deep Dive into Budget 2025’s Proposals
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