New Delhi: The Central Board of Direct Taxes (CBDT) acted against intermediaries involved in bogus tax deduction claims after detecting widespread misuse of income tax provisions.
During the exercise, officials found that some intermediaries built nationwide agent networks. These agents filed income tax returns with false deduction and exemption claims for commission. As a result, such filings reduced tax liability and, in several cases, generated bogus refunds.
Moreover, the CBDT found that many bogus tax deduction claims involved donations to Registered Unrecognised Political Parties and charitable institutions. Evidence showed that several RUPPs were non-filers and non-operational at their registered addresses. In addition, they carried out no political activity. Authorities said these entities acted as conduits for fund routing, hawala transactions, and cross-border remittances. They also issued fake donation receipts.
Subsequently, the CBDT conducted follow-up searches against select RUPPs and trusts. These actions yielded incriminating evidence of bogus individual donations. They also revealed false corporate social responsibility claims by companies.
Bogus tax deduction claims flagged through data analytics
Meanwhile, the CBDT strengthened its data-driven systems to detect suspicious behaviour early. Using analytics, officials identified a high-risk pattern among taxpayers claiming deductions under Sections 80G and 80GGC of the Income Tax Act, 1961.
The data suggested that many taxpayers claimed deductions for donations to suspicious entities. In some cases, they failed to provide details to establish the genuineness of these entities. Therefore, after enforcement action, several taxpayers revised their returns for the current assessment year 2025–26. Others filed updated returns for previous years.
To promote voluntary compliance, the CBDT launched a targeted NUDGE campaign. Under this initiative, taxpayers received an opportunity to withdraw incorrect claims. From December 12, 2025, the Department began sending SMS and email advisories to affected taxpayers.
Finally, the CBDT advised taxpayers to update their mobile numbers and email addresses. This step, officials said, would help them receive all departmental communications on time.
