As the tax filing deadline approaches, the Income Tax Department has initiated a sweeping nationwide crackdown on more than 200 individuals including chartered accountants, accountants, and salaried taxpayers for allegedly misusing the paperless return filing system to claim fraudulent deductions under the Old Tax Regime.
The crackdown focuses on fake deduction claims, including house rent allowance (HRA), electric vehicle (EV) loan benefits, and political contributions under Section 80GGC.
According to a media report, “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 said.
“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 carrying out operations under Section 132 (Searches) at select premises and Section 133A (Surveys) at most identified locations across the country, including Mumbai, Delhi, Jaipur, and Ahmedabad.
This action is part of the Income Tax Department’s larger “nudge campaign,” launched earlier this year to caution taxpayers about suspicious deduction claims. However, despite repeated warnings, many individuals continued to file inflated or false 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.
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 revealed that in several cases, taxpayers submitted forged donation receipts or routed payments through shell entities disguised as political organisations.
Although the department has not yet named any individuals, further action is likely based on findings from the ongoing searches and surveys. As the investigation progresses, the department is expected to issue additional advisories and may initiate prosecution against those responsible for orchestrating or aiding in the fraudulent deduction claims.