90,000 Taxpayers Correct Wrong Claims, Pay ₹1,070 Crore Extra Following IT Department Crackdown”

Around 90,000 taxpayers, including individuals and businesses, have corrected their wrongful tax claims and paid additional taxes after an initiative by the Income Tax Department targeting such errors. This has led to an extra ₹1,070 crore being paid for the fiscal years 2023, 2024, and up to December 2024, according to a source.

Wrong Claims Found

For individuals, incorrect tax claims were mostly related to deductions under section 80 of the Income Tax Act, such as investments in insurance policies and health insurance premiums. For businesses, wrongful claims were identified in tax benefits given to units in Special Economic Zones (SEZs).

The issue came to light during tax department searches, seizures, and surveys. Investigations revealed that employees from various sectors, including public sector companies, large corporations, multinationals, LLPs, and private companies, had made false claims. Additionally, some individuals were found to have been misled into claiming incorrect deductions or refunds, the source said.

Raising Awareness

To address this, the tax department is conducting outreach programs with employers to educate taxpayers about the consequences of making incorrect claims. Taxpayers are being informed that they can fix mistakes in their tax returns by filing revised forms and paying the additional tax within two years of the relevant assessment year, covering assessment years 2022-23 to 2024-25.

Deductions under section 80 are meant to encourage specific investments, savings, or spending to reduce taxable income. Similarly, SEZ units are given tax benefits to promote exports, but only under certain conditions. The department’s goal is to ensure these tax advantages are claimed correctly and fairly.

New Initiatives

A fresh outreach initiative is being introduced to encourage voluntary compliance and reduce disputes. By promoting awareness and providing taxpayers with opportunities to amend errors, the department aims to improve tax compliance and prevent misuse of tax deductions.