CBDT nudges taxpayers to curb fake deduction claims through data-driven checks

New Delhi [India], December 14 : The Central Board of Direct Taxes (CBDT) has stepped up its data-driven push to curb bogus tax deduction claims, warning taxpayers to correct wrong filings after uncovering widespread misuse of donation-based exemptions, according to a Ministry of Finance release issued on Saturday.

The tax authority recently acted against several intermediaries who filed income tax returns with false claims of deductions and exemptions.

Officials found that some intermediaries built networks of agents across the country who filed returns with incorrect claims in exchange for commissions. The probe showed that many individuals reduced their tax liability by making bogus claims for donations to Registered Unrecognised Political Parties (RUPPs) or charitable institutions, and also sought improper refunds.

During enforcement work, CBDT found that several RUPPs were either non-filers, non-operational at their listed addresses, or not involved in any political activity. Evidence showed these entities were being used to route funds, carry out hawala operations, facilitate cross-border remittances and issue fake donation receipts. Follow-up searches on some of these RUPPs and trusts led to the recovery of material indicating bogus donations by individuals and fake corporate social responsibility contributions by companies.

CBDT has strengthened its data-based monitoring to detect suspicious claims early and identify high-risk behaviour patterns. One such pattern flagged taxpayers who claimed deductions under sections 80GGC or 80G of the Income Tax Act, 1961. Data analytics suggested that many taxpayers either donated to suspicious entities or failed to provide information needed to verify the genuineness of those entities. Large numbers of taxpayers have since revised their returns for the current assessment year 2025-26 and filed updated returns for earlier years.

To help taxpayers correct errors, the Department has begun a targeted NUDGE campaign, described as a taxpayer-friendly measure in the release. From December 12, 2025, SMS and email advisories are being sent to taxpayers on their registered mobile numbers and email addresses, urging them to update their returns and withdraw any incorrect claims.

The Department has also advised taxpayers to keep their contact details updated in official records so they do not miss important communication.

More information about deduction provisions and filing updated returns is available on the Income Tax Department's official website.

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