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Written by 3:47 pm Economy

Over 90,000 income tax payees withdrew wrongful deductions worth over ₹1,000 crore

Over 90,000 taxpayers have withdrawn wrongful tax deductions amounting to over ₹1000 crore, government sources said on Thursday.

“These assessees have paid additional taxes,” said a source. These incorrect deductions are claimed under Section 80C (deposit/investment in notified instruments), 80D (health insurance premium), 80E (interest paid on the Education loan availed for higher studies), 80G (donation to notified charitable institutions), 80GGB and 80GGC (donation to political parties/electoral trust) of the Income Tax Act.

“Wrongful deductions in their ITRs led to reduction of tax payable to the government,” said the source. Investigations revealed that such individuals are employees of PSUs, big corporations, MNCs, LLPs, private limited companies, and even government organisations and statutory bodies. “Verification has revealed that certain unscrupulous elements have misguided taxpayers for claim of incorrect deduction/refunds,” the source said.

According to sources, individuals claiming wrongful deductions were working in the same companies.  

Mismatch in deductions

An investigation by the Central Board of Direct Taxes has further revealed insights w.r.t. fraudulent claims of deductions in the ITRs. Analysis of the information revealed a mismatch between total deductions under sections (u/s) 80GGB/80GGC claimed by taxpayers in their ITRs as against the total receipts shown by the donees in their ITRs. Similarly, deductions claimed u/s 80C, 80E, 80G also appear to be suspicious in nature.

“A list of common employers (i.e., TDS deductors) has been identified. The list has been identified keeping in mind the objective of reaching out to as many persons as possible who are suspected to have claimed bogus deductions u/s 80E, 80G, 80GGA, 80GGC and other deductions,” another source said.

He also said that the IT Department has been conducting outreach programmes with employers to spread awareness about the consequences of claiming incorrect deductions in the ITRs and corrective measures to rectify the errors of omission or commission.  “

As per the provisions of section 139(8A) of the Income Tax Act, 1961, tax payers can file updated returns on payment of some additional tax as prescribed under law rectifying the errors of omission or commission within two years from the end of the relevant assessment year,” he explained. This means for AY 2022-23, an updated return can be filed till March 31, 2025. However, some penalty will be levied. 

Meanwhile, the department has said that as announced in the Union Budget 2024-25, withdrawal of small value direct tax demands has benefitted over 77 lakh taxpayers with over 1.12 crore demands have been extinguished.



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