With the income tax return (ITR) filing deadline looming, the Income Tax Department has launched a nationwide crackdown on fraudulent deduction and exemption claims. Acting on directions from the Central Board of Direct Taxes (CBDT), tax officials have been instructed to identify and halt dubious refund filings, aiming to stem losses from inflated or bogus submissions.
According to officials, over the past filing season, there has been a noticeable surge in bogus refund applications, prompting policy action from the CBDT the apex authority for India’s direct tax system.
A circular issued to regional tax offices, has asked officers to flag and suspend questionable filings. The CBDT emphasized that such returns should be halted immediately pending further investigation, even if refunds have already been processed. The crackdown is expected to impact cases where deductions appear inflated or poorly documented, especially those filed hastily to beat the deadline.
Systemic Tightening: Audit, Identification, and Recovery
The CBDT’s directive also calls for enhanced due diligence by assessment officers and active supervision by Principal Chief Commissioners of Income Tax (PCCITs). Internal audits have already begun identifying refund requests that do not align with legitimate income levels or exemption eligibility.
Investigating officers have been ordered to recover refunds in cases where fraudulent claims have slipped through. Authorities clarified that this is not just a seasonal measure but part of a larger systemic cleanup, aimed at restoring confidence in India’s increasingly digitized tax ecosystem.
In addition, the CBDT has reiterated the need for relevant and justified queries during assessments. Tax officials have been told to exercise “due application of mind” while scrutinizing returns to avoid raising irrelevant or excessive questions, which have often drawn criticism from honest taxpayers.
Guidance for Taxpayers: Accuracy is the Best Defence
Taxpayers are being urged to exercise extreme caution while filing ITRs this year. Officials warn that any discrepancy in documentation, inflated claims, or use of fake receipts could invite scrutiny and potential legal consequences. With the department deploying stricter AI-assisted checks and pre-validation measures, transparency and documentationhave become more critical than ever.
The crackdown has also brought renewed attention to refund scams, including “manual verification” frauds, where scammers impersonate officials to extract sensitive data. The CBDT is working with cybersecurity agencies to curb such scams as they often spike during peak filing periods.
Tax experts advise individuals to file early, keep all supporting documents ready, and avoid grey-area deductions to stay on the right side of the law. With automated red flags and manual reviews in play, the risks of careless or fraudulent filings have never been higher.