The Department has identified around 15,000-20,000 cases in which taxpayers may have altered deductions or exemptions while filing revised or updated income tax returns, according to a report by The Times of India.
The IT department is examining these cases as part of its broader compliance efforts that use data analytics and third-party information to identify discrepancies in tax filings.
According to the report, tax authorities have also asked employers to review mismatches in Form 24Q, the quarterly statement filed for (TDS) on salaries.
‘Swapped’ tax claims explained
According to the TOI report, tax authorities have detected instances where taxpayers withdrew one tax benefit and claimed another while filing a revised or updated return.
One pattern cited in the report involved employees who initially claimed House Rent Allowance (HRA) exemption but later withdrew the claim and instead sought benefits under Section 10(14) of the Income-tax Act, which covers specified allowances such as conveyance, education and allowances for working in hilly areas.
The report also cited cases in which taxpayers changed the category under which donations were claimed when filing updated returns. For instance, some taxpayers reportedly sought to switch from deductions for donations to political parties to deductions available for contributions to research institutions.
Officials quoted by TOI said that in several cases, the additional income tax involved was only a few hundred rupees. However, the department has reportedly focused on cases involving suspected discrepancies of ₹50,000 to ₹1 lakh.
According to the report, around 15,000-20,000 such cases have been identified and could be subject to scrutiny.
Employers asked to review TDS mismatches
Separately, the IT department has contacted employers and asked them to analyse mismatches in Form 24Q, the quarterly statement relating to (TDS) on salaries, according to the report.
TOI reported that companies and government departments have also been sensitised to educate employees against falling prey to intermediaries who encourage taxpayers to make unsupported claims in exchange for a commission.
Part of the ‘Nudge’ campaign
The exercise is part of the department’s ‘Nudge’ campaign, under which taxpayers are encouraged to voluntarily correct discrepancies identified by tax authorities before stricter action is initiated, the report said.
Officials told TOI that data analytics tools have made it easier to identify potential red flags and to communicate with taxpayers via email and messages. According to the report, taxpayers often voluntarily correct or update their returns when discrepancies are brought to their attention.
The report added thatforms have also been updated over time to capture additional information on items such as health insurance, education loans and electric vehicle loans. These updates allow tax authorities to compare taxpayer claims with information available from other sources.
The latest exercise highlights the department’s increasing reliance on data-driven compliance measures to identify potential mismatches and incorrect claims in tax returns.