Thousands of government employees are correcting earlier Income Tax Returns after strict checks uncovered a wide pattern of false deductions. In the Nagpur region alone, nearly 6,000 employees filed revised ITRs. Across India, more than 40,000 taxpayers withdrew inflated claims worth over ₹1,045 crore. The shift shows growing pressure to file clean and accurate returns.
What Triggered These Revisions
Income Tax officers carried out focused surveys on a few Income Tax Practitioners. These surveys uncovered false entries across returns filed for teachers, police staff, PSU workers, and other salaried groups. The most common issues included:
- Claims for home loan interest with no real loan
- Fake medical insurance premium entries
- Bogus donation receipts
- Random deductions under the old “any other” category
After officers reached out through employer networks, many taxpayers corrected their returns on their own. In places like Buldhana, coordinated communication through district police offices helped large groups revise their filings fast.
How AI and Data Checks Helped the Department
The Central Board of Direct Taxes expanded the action across several states. AI tools flagged mismatched TDS details, unusual deduction patterns, and repeated data linked to certain preparers. By July 2025, officers searched around 150 locations and shut down groups running refund-for-commission schemes.
| Region | Revised ITRs | Amount Recovered/Withdrawn | Main Groups |
|---|---|---|---|
| Nagpur | ~6,000 | ₹25 crore | Govt staff, teachers, police |
| India (Total) | 40,000+ | ₹1,045 crore | Salaried class across PSUs, MNCs, govt bodies |
| Buldhana | 1,500+ | Part of regional total | Police staff |
Why These Deductions Became Easy Targets
Loose rules around some deductions made misuse easy. Many preparers promised larger refunds and charged a small cut. With rising living costs, these offers tempted many salaried filers.
Now, new form rules and document checks make false claims harder. Insurers, charity bodies, and other institutions now provide digital details that match with ITR entries.
| Deduction | Section | Common Issue | New Check |
|---|---|---|---|
| Home Loan | Section 24 | Loan not actual | Proof upload |
| Medical Insurance | Section 80D | Fake policy | Match with insurer |
| Donations | Section 80G | Fake receipt | Digital certificate |
| Other Deductions | Chapter VI-A | Unsupported claims | Mandatory evidence |
Impact on Taxpayers
Most people who corrected their returns have not faced penalties. The department focused first on recovery. But action continues against preparers who created false claims. They may face heavy penalties and jail under relevant provisions of the Income Tax Act.
Many salaried taxpayers are now keeping better records and avoiding unauthorized preparers. Departments may also start checking employee records more closely while handling salary and allowance data.
What Lies Ahead
With the deadline for revised returns nearing, more taxpayers are checking their earlier filings. Stronger forms and digital checks will likely reduce misuse in coming years.
This clean-up drive shows the system moving toward better transparency. Strong technology, simple outreach, and clear rules are helping more people file correct ITRs.
Key Citations:
Times of India: Govt employees file revised I-T returns, pay evaded tax
PIB: Income Tax Department cracks down on bogus claims of deductions & exemptions
Financial Express: 40,000 taxpayers withdrew Rs 1,045-crore bogus ITR claims