CBDT uses data analytics to curb bogus tax deduction claims
Tax department flags suspicious donations to RUPPs and trusts; targeted ‘NUDGE’ campaign launched to prompt voluntary correction of ITRs.
Mumbai, Dec 14 : The Central Board of Direct Taxes (CBDT) has taken action against several intermediaries involved in filing income tax returns with bogus claims of deductions and exemptions under the Income Tax Act, the Ministry of Finance said on Saturday.
According to the ministry, investigations revealed that certain intermediaries had built nationwide networks of agents who filed returns on a commission basis, inflating deductions and exemptions to reduce tax liabilities and claim fraudulent refunds.
“It was observed that huge amounts of bogus claims were made on account of donations to Registered Unrecognised Political Parties (RUPPs) and charitable institutions,” the ministry said, adding that such claims were used to artificially lower tax obligations.
Evidence gathered during enforcement actions showed that several RUPPs many of which were non-filers, non-operational at their registered addresses and not engaged in political activity were being used as conduits for routing funds, hawala transactions, cross-border remittances and issuing bogus donation receipts.
The CBDT conducted follow up searches on some of these RUPPs and trusts and recovered incriminating material pointing to fake donations by individuals and bogus corporate social responsibility (CSR) claims by companies.
The tax department has further strengthened its data-driven approach to detect suspicious claims at an early stage and identify high-risk behavioural patterns. One such risk profile has been identified for taxpayers claiming deductions under Sections 80GGC and 80G of the Income Tax Act, 1961.
Data analytics indicated that many taxpayers may have claimed deductions for donations made to suspicious entities or failed to provide sufficient information to establish the genuineness of such claims.
A large number of taxpayers have already revised their income tax returns for the current assessment year 2025–26 and have filed updated returns for earlier years, the ministry said.
As part of a taxpayer friendly compliance drive, the CBDT has launched a targeted ‘NUDGE’ campaign, offering taxpayers an opportunity to voluntarily update their returns and withdraw incorrect claims. SMS and email advisories are being issued from December 12, 2025, to affected taxpayers on their registered mobile numbers and email addresses.
The ministry advised taxpayers to ensure that their contact details are correctly updated in departmental records to avoid missing important communications.
