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Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
******
New Delhi, 14th July, 2025
Press Release
Income Tax Department Cracks Down on Bogus Claims of Deductions & Exemptions
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.
Investigations have uncovered organized rackets operated by certain ITR preparers and intermediaries, who have been filing returns claiming fictitious deductions and exemptions. These fraudulent filings involve the abuse of beneficial provisions, with some even submitting false TDS returns to claim excessive refunds.
To identify suspicious patterns, the Department has leveraged financial data received from third-party sources, ground-level intelligence, and advanced artificial intelligence tools. These findings are further substantiated by recent search and seizure operations conducted in Maharashtra, Tamil Nadu, Delhi, Gujarat, Punjab, and Madhya Pradesh, where evidence of fraudulent claims was found to have been used by various groups and entities.
Analysis reveals rampant misuse of deductions under sections 10(13A), 80GGC, 80E, 80D, 80EE, 80EEB, 80G, 80GGA, and 80DDB. Exemptions have been claimed without valid justification. Employees of MNCs, PSUs, government bodies, academic institutions, and entrepreneurs are among those implicated. Taxpayers are often lured into these fraudulent schemes with promises of inflated refunds in return for a commission. Despite a fully e-enabled tax administration system, ineffective communication remains a significant hurdle in assisting taxpayers. It has been observed that such ITR preparers often create temporary email IDs solely for filing bulk returns, which are later abandoned, resulting in official notices going unread.
In line with its guiding principle of ‘Trust Taxpayers First’, the Department has emphasized voluntary compliance. Over the past year, the Department has carried out extensive outreach efforts, including SMS and email advisories, nudging suspected taxpayers to revise their returns and pay the correct tax. Physical outreach programs, both on and off campus, have also been conducted. As a result, approximately 40,000 taxpayers have updated their returns in the last four months, voluntarily withdrawing false claims amounting to ₹1,045 crore. However, many remain non-compliant, possibly under the influence of the masterminds behind these evasion rackets.
The Department is now poised to take stern action against continued fraudulent claims, including penalties and prosecution wherever applicable. The ongoing verification exercise across 150 premises is expected to yield crucial evidence, including digital records, that will aid in dismantling the networks behind these schemes and ensure accountability under the law.
Further investigations are currently underway.
Taxpayers are again advised to file correct particulars of their income and communication coordinates and not be influenced by advice from unauthorized agents or intermediaries promising undue refunds.
(V. Rajitha)
Commissioner of Income Tax
(Media & Technical Policy) &
Official Spokesperson, CBDT
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Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
******
New Delhi, 18th March, 2025
Press Release
Seeking stakeholders' input for drafting Income-tax Rules and related forms consequent to the Income Tax Bill, 2025
The Income Tax Bill, 2025 has been introduced in Parliament and is currently under examination by the Select Committee for detailed consideration. Stakeholders are encouraged to continue submitting their suggestions on the provisions of the Bill, which will be compiled and forwarded to the Select Committee for its review.
In alignment with the comprehensive review of the Income-tax Act, 1961, an effort is underway to collect inputs and work on simplification of the associated Income Tax Rules and Forms. The objective of this initiative is to enhance clarity, reduce the compliance burden, and eliminate obsolete rules, making tax processes more accessible for taxpayers and other stakeholders. Additionally, streamlining the Rules and Forms aims to simplify tax compliance, improve taxpayer comprehension and ease of filing, lower administrative burdens and errors, and enhance transparency and efficiency.
As part of a wider consultative process, the committee formed to review the Rules and Forms invites inputs and suggestions from stakeholders in the following four categories:
1. Simplification of Language
2. Reduction of Litigation
3. Reduction of Compliance Burden
4. Identification of Redundant/Obsolete Rules and Forms
To facilitate this, a utility has been launched on the e-filing portal, which can be accessed through the following link:
https://eportal.incometax.gov.in/iec/foservices/#/pre-login/ita-comprehensive-review
The above link is live and accessible to all stakeholders from 08.03.2025 on the e-filing portal. Stakeholders can submit their inputs by entering their name and mobile number, followed by an OTP-based validation process.
All suggestions should clearly specify the relevant provision of the Income-tax Rules, 1962 (including the specific section, sub-section, clause, rule, sub-rule, or form number) to which the recommendation pertains under the aforementioned four categories.
(V. Rajitha)
Commissioner of Income Tax
(Media & Technical Policy) &
Official Spokesperson, CBDT
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
******
New Delhi, 17th March, 2025
PRESS RELEASE
CBDT issues Circular on Frequently Asked Questions (FAQs) relating to Revised Guidelines for Compounding of Offences under Income-Tax Act, 1961 dated 17.10.2024– reg.
The revised Guidelines for Compounding of Offences under the Income-Tax Act, 1961 (hereinafter referred to as “the guidelines”) were issued on October 17, 2024. These guidelines supersede all existing guidelines on the subject and are applicable to all pending as well as new applications from the date of their issuance.
The guidelines have been simplified compared to the previous version, inter alia, by eliminating the categorization of offences, removing the limit on the number of occasions for filing applications, allowing fresh applications upon curing of defects, permitting the compounding of offences under sections 275A and 276B of the Act, and removing the existing time limit for filing applications, which was previously set at 36 months from the date of filing of the complaint.
Following the issuance of the guidelines, queries were received from stakeholders seeking clarifications on various provisions. Based on these queries, the CBDT has issued Circular No. 04/2025, dated March 17, 2025, in the form of answers to frequently asked questions (FAQs). These FAQs provide the necessary clarifications on the scope of the guidelines, eligibility for filing applications, the mode of filing compounding applications and payment of fees, terms for compounding, compounding charges and procedures for payment, time limits, and other related aspects.
The FAQs are available on the official website of the Income Tax Department at https://incometaxindia.gov.in/news/circular-no-04-2025.pdf
(V. Rajitha)
Commissioner of Income Tax
(Media & Technical Policy) &
Official Spokesperson, CBDT
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
******
New Delhi, 15th March, 2025
Press Release
CBDT issues clarification on Circular 01/2025
Circular No. 01/2025 dated 21.01.2025 was issued in the form of a guidance to provide clarity and certainty on the application of the Principal Purpose Test (PPT) provision under India’s Double Taxation Avoidance Agreements (DTAAs). In respect of this Circular, it is clarified that:
1. The Circular seeks to provide guidance on the application of the PPT provision under India’s DTAAs, wherein such a provision exists. Therefore, this Circular shall apply to the PPT provision in only those Indian DTAAs wherein such a provision exists.
2. The Circular is not intended to interfere or interact with any other provision of the Indian DTAAs, including such provisions that may be invoked for examination of treaty entitlement or denial of treaty benefits, other than the PPT.
3. The Circular is not intended to interfere or interact with anti-abuse rules under the domestic law, such as General Anti-Abuse Rule (GAAR) and Specific Anti-Abuse Rules (SAAR), and Judicial Anti-Abuse Rules (JAAR) reflected in or resulting from judicial interpretations. Such rules shall continue to operate independently.
4. This clarification does not introduce any new legal interpretation but reaffirms that the Circular applies only to the PPT without affecting other provisions of the Income-tax Act. The Government remains committed to ensuring consistency in tax law interpretation while upholding the existing legal framework.
(V. Rajitha)
Commissioner of Income Tax
(Media & Technical Policy) &
Official Spokesperson, CBDT