ITR refund scam: Income Tax Dept cracks down on CA-run rackets promising inflated tax refunds
The Income Tax Department has started cracking down on certain chartered accountants (CAs) and related professional intermediaries who have been found involved in helping taxpayers claim fake tax deductions and exemptions. Reports suggest that income tax authorities have continued to conduct raids on multiple locations in the country related to income tax return (ITR) preparers and entities.
The Finance Ministry issued a circular on July 14, informing about strict actions initiated against fraudulent tax activities by income taxpayers and certain tax professionals.
The I-T department said that it targeted individuals and entities “facilitating fraudulent claims of deductions and exemptions” in ITRs. The department’s investigations have so far found that thousands of taxpayers colluded with professional intermediaries as the latter promised them high refunds and charged huge commissions in return.
How is this tax fraud done?
“Investigations have uncovered organised 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,” the government said.
Tax professionals and agents assure taxpayers that they can get them higher tax refunds. For this, they show fake deductions and exemptions in ITR – such as HRA, 80C, 80D, 80G, home loan interest etc.
Taxpayers are explained that if the Income Tax Department does not inquire, they will get the full refund and a certain percentage will have to be given to the agent as commission.
In many cases, it has been seen that such professionals win the trust of people by calling themselves chartered accountants, while they are not registered.
