The Income Tax Department is cracking down on false tax exemptions being claimed by people in their Income Tax Returns. Most of these exemptions, under the old income tax regime, are for individuals who earn over Rs 20 lakh.
The tax authorities have identified many instances of false exemption claims submitted by taxpayers, leading to enhanced risk evaluation procedures at the Central Processing Centre to stop incorrect refund disbursements, according to an ET report.
The tax authority has implemented computerised verification systems to examine taxpayers previously identified for filing inflated claims. The department has enhanced its utilisation of sophisticated data analysis and AI technologies to detect inconsistencies in income declarations by individuals.
ITR filing: What false exemptions claims are being scrutinized?
The fraudulent exemption claims comprise fabricated medical expenses and fictitious donations to political and religious entities, with a significant portion of these claims originating from taxpayers who opted for the old tax structure.
Sources knowledgeable about the matter told ET that the attempted tax avoidance through these deceptive practices amounts to approximately 700 crore.
The processing of refunds might experience delays, particularly for claims exceeding Rs 10 lakh, according to these sources.
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