Income Tax Dept Launches Crackdown On Fake ITR Claims, AI Flags Suspicious Deductions

New Delhi: The Income Tax Department has initiated a sweeping crackdown on fraudulent claims of deductions and exemptions in Income Tax Returns (ITRs), targeting widespread misuse across the country. The move comes after advanced analytics and artificial intelligence tools identified organized patterns of false filings, particularly involving certain beneficial provisions under the Income Tax Act.

Among the provisions under scrutiny are Section 10(13A) (house rent allowance), Section 80GGC (donations to political parties), 80E (education loan interest), 80D (health insurance premium), 80EE and 80EEB (home and electric vehicle loan interest), 80G (charitable donations), 80GGA (scientific research), and 80DDB (critical illness treatment). The department found that many taxpayers, often aided by professional intermediaries, were claiming exaggerated or completely false deductions to reduce their tax liability.

The crackdown is based on insights from AI-driven cross-verification with third-party data, including financial institutions, employer records, and donation databases. This has helped uncover a network of fraudulent practices designed to exploit tax exemptions at scale.

In many cases, organized rackets are believed to have coached or assisted taxpayers in fabricating documentation or inflating deduction amounts. Notices have already been issued to several individuals and firms, with more expected as the verification process continues.

Taxpayers are being advised to revisit their returns, especially if deductions were claimed without proper documentation. The department has warned that false claims could attract penalties, interest, or even prosecution under relevant sections of the Income Tax Act.