The Income Tax Department has taken strict action against tax evaders across the nation. In this operation, which started on July 14, raids were conducted at more than 200 places in many states, including Maharashtra, Delhi, Tamil Nadu, Punjab, Gujarat, and Madhya Pradesh. All these raids have been conducted on those people and agencies who had claimed fake deductions and exemptions in income tax returns.

The investigation revealed that some agents and middlemen filing ITR saved tax by preparing fake documents in an organized manner. An attempt to get an additional refund by filing fake TDS returns was also revealed. Various sections of the tax law were misused. Let us understand which sections were used for tax evasion. Also, we will know how they can be used for such crimes.

Use of different sections

Section 10(13A) – House Rent Allowance (HRA): People take HRA exemption without paying rent or by making fake receipts. Many times, fake transactions are shown in connivance with friends or relatives, which saves hundreds of rupees.

Section 80GGC – Political donation: Political donations are claimed by making fake receipts. Some people deduct tax by donating in cash (which is illegal) or by taking fake receipts.

Section 80E – Interest on education loan: Interest exemption is taken by making fake education loan documents. Lakhs can be saved by claiming even without taking a loan.

Section 80D – Health insurance: The Premium amount is inflated by presenting fake insurance policy receipts. By this, an exemption of up to ₹ 1 lakh can be obtained by making a false claim.

Section 80EE, 80EEB – Home loan/electric vehicle: Additional exemption of ₹ 50,000 on home loan or ₹ 1.5 lakh on electric vehicle loan is taken by making fake loan agreements, even if no loan has been taken.

Section 80G, 80GGA – Charitable donation: Fake charity receipts are used to claim 50% or 100% deduction. Cash donations (more than ₹2,000) are also falsely claimed.

Section 80DDB – Critical illness expenses: Fake medical bills or reports are used to show expenses for treatment of critical illness, which provides a deduction of ₹1 lakh (or ₹1.5 lakh for senior citizens).

Help from relatives and friends

In many of these cases, people showed fake transactions with the help of their relatives or friends. In some cases, entire rackets were running that used to get such fake documents made in exchange for money. According to a report, such agents and middlemen used to charge ₹5,000 to ₹15,000 per customer in the name of ITR filing and sometimes even took a share of the tax refund. This fraud is spread from small employees to mid-level professionals.

Use of AI to catch theft
The Income Tax Department is now engaged in identifying and tracking such cases with the help of AI, data cross verification, and digital analytics. The department is now trying to verify every claim of tax deduction in real time. The system now matches medical, insurance, and donation receipts with government portals. The department has warned that if any taxpayer claims an exemption based on such fake documents and is caught, they may face a heavy penalty and jail. Under the Income Tax Act, if fraud is proved, there is a provision for punishment of three to seven years in addition to a fine.

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