In a major action launched across multiple states against fake refunds, the income tax department on Monday said it has cracked down on widespread abuse of tax deductions and exemptions claimed during income tax returns (ITRs).
“The income tax department initiated a large-scale verification operation across multiple locations in the country on 14th July 2025, targeting individuals and entities facilitating fraudulent claims of deductions and exemptions in Income Tax Returns (ITRs). This action follows a detailed analysis of the misuse of tax benefits under the Income-tax Act, 1961, often in collusion with professional intermediaries," the Central Board of Direct Taxes, under the Ministry of Finance, said in a statement on July 14.
Tax Fraud Spread Across States
According to the statement, the fraud spans several states, including Maharashtra, Tamil Nadu, Delhi, Gujarat, Punjab, and Madhya Pradesh, where recent search and seizure operations have yielded concrete evidence.
To identify suspicious patterns, the department has leveraged financial data received from third-party sources, ground-level intelligence, and advanced artificial intelligence tools, it added.
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