In a sweeping enforcement drive ahead of the tax filing deadline, the Income Tax Department has launched a nationwide crackdown on over 200 individuals, including chartered accountants, accountants, and salaried taxpayers, for misusing the paperless return filing system to claim fraudulent deductions under the Old Tax Regime.
The crackdown targets bogus claims related to house rent allowance (HRA), electric vehicle (EV) loan deductions, and political donations under Section 80GGC.
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“There's rampant abuse of Section 80GGC, which allows deductions for contributions to political parties. Officials say fake donations to Registered Unrecognized Political Parties (RUPPs) have been used to evade taxes running into hundreds of crores of rupees each year," an official in know told NDTV Profit.
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"These deductions are not only illegal but also deeply distort the political and democratic process,” a senior official said. “Political parties are being misused as vehicles for large-scale tax evasion," he explained.
The department is conducting operations under Section 132 (Searches) at select premises, and Section 133A (Surveys) at a majority of the locations identified across the country. This covers Mumbai, Delhi, Jaipur and Ahmedabad.
This exercise is part of the I-T Department's broader “nudge campaign”, launched earlier this year to warn taxpayers about suspicious deductions in their filings. Despite the alerts, many taxpayers continued to submit fabricated or inflated claims.
"These pan-India actions are intended to send a strong deterrent message,” the department said in a statement. “The aim is to prevent systemic misuse of digital tax processes and uphold the integrity of the tax system.”
Officials say in many cases, forged donation receipts were submitted, or payments were routed through shell entities posing as political organisations.
While the department has yet to disclose names, further enforcement is expected based on the findings from these searches and surveys.
As investigations continue, the department is expected to issue further advisories and, if necessary, initiate prosecutions against those involved in orchestrating and facilitating fraudulent deductions.
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