CBDT Takes Enforcement Action Against Intermediaries Facilitating Bogus Deduction Claims in Income-tax Returns

CBDT NUDGEs taxpayers against the claims of bogus deductions through data-driven approach

After a massive nationwide operation, the Central Board of Direct Taxes (CBDT) has acted against several intermediaries involved in filing income-tax returns with bogus claims of deductions and exemptions under the Income-tax Act.

The action follows enforcement measures undertaken in July 2025, during which around 150 premises were covered. In the course of these actions, more than 102 suspicious Registered Unrecognised Political Parties (RUPPs) were identified for their role in facilitating bogus donation-linked deductions.

Data analytics flagged over two lakh taxpayers who had claimed suspicious deductions under Section 80GGC, aggregating to approximately ₹5,500 crore routed through suspicious or non-existent RUPPs, along with a similar amount of bogus donations made to non-genuine charitable organisations. The enforcement findings also led to reversal of bogus deduction claims by several taxpayers.

Around 54,000 taxpayers have already corrected their filings and withdrawn ineligible claims amounting to approximately ₹1,400 crore, and updated their returns after being nudged by the CBDT to revise their returns.

Most of these taxpayers had claimed deductions below ₹5 lakh, while a few companies were found to have claimed very high deductions.

The exercise further revealed that intermediaries had established networks of agents across various locations to file income-tax returns with incorrect claims on a commission basis. In one instance, an intermediary was found advertising guaranteed refunds in cinema halls and on social media platforms. Investigations also revealed the existence of a syndicate of professionals operating through WhatsApp and Telegram channels to identify taxpayers seeking to reduce tax liability through fake donations to RUPPs or charitable organisations.

Instances of misuse of CSR-linked trusts were also detected, wherein bogus donation receipts were issued in exchange for cash-back.

It was observed that huge amounts of bogus claims had been made on account of donations to RUPPs or charitable institutions, thereby reducing tax liabilities and leading to claims of bogus refunds. Evidence gathered during enforcement actions indicated that many RUPPs were non-filers, non-operational at their registered addresses, and were not engaged in any political activity. Such entities were being used as conduits for routing funds, hawala transactions, cross-border remittances, and issuance of bogus donation receipts, as stated in an official communication issued by the authorities.