Incorrect claim of deductions/exemptions- Excess claim of refunds - Advisory to employees

Sub: Incorrect claim of deductions/exemptions- Excess claim of refunds - Advisory to employees - Request - Reg.

The Income-tax Department has taken several initiatives to ensure ease of compliance for taxpayers while discharging obligations cast upon them by the Income-tax Act. In particular, the Income-tax Return Form has been greatly simplified, with taxpayers being able to submit their returns online in a seamless manner. The Income-tax Department reposes trust in its taxpayers, accordingly while filing IT Returns, taxpayers need not submit copies of supporting documents in respect of deductions / exemptions claimed by them in their Returns.

2. At the same time, Income-tax Department also monitors the correctness of returns filed by taxpayers, including the eligibility of deductions / exemptions claimed by them. It has been reliably learnt that in the twin states of Andhra Pradesh and Telangana, a large section of salaried employees have been lured into claiming refund by filing false IT Returns by exaggerating their claims of deductions / exemptions. Many such employees have claimed refunds as high as 75-90% of the TDS deducted by the Accounts section of the organization they work in.

3. Our monitoring exercise and field surveys have revealed that a significant

number of employees working with your organisation have taken refunds based on

deductions / exemptions claimed which appear to be suspicious / incorrect. These claims of deductions and exemptions are currently under verification by the Department. 4. In light of the above facts, the Department urges your goodself to advise all the employees of your organisation to verify the correctness of their claim of deductions / exemptions for IT Returns filed for AY 2023-24, AY 2022-23 and AY 2021-22. In case any incorrect deduction / exemption has been claimed, the employees may be advised to file updated / revised returns to rectify the wrong

claim. This opportunity of voluntarily coming clean and filing updated returns will not

be available after the case of the taxpayer is selected for scrutiny and notice is issued to him.

5. Employees may also be suitably informed that consequences of misreporting income by claiming wrongful deductions would entail interest on additional tax, penalty @ 200% of additional tax and in severe cases, also include prosecution and imprisonment. Accordingly, your employees may please be advised to not be lured by tax consultants / touts and claim wrong deductions in any of the IT Returns being filed by them in future. For any query / assistance, taxpayers may contact Aayakar Seva Kendras at their local Income-tax Offices, visit the website www.incometaxindia.gov.in or call the helpline numbers 1800-103-0025/1800-419

Download Income Tax Circular