HomeIn The FrameAP&T Income Tax sleuths unwrap major refund scam

AP&T Income Tax sleuths unwrap major refund scam

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Urge salaried taxpayers to reap only rightful refunds or face action

Although the Income Tax Department has been taking several initiatives to ensure ease of compliance for taxpayers and encourage voluntary compliance, the department has unearthed a major scam that has been in the making for quite some time now.

As per the state’s Income Tax Department, it has been found that a large number of salaried taxpayers of Andhra Pradesh and Telangana have claimed deductions/exemptions which are not correct and have claimed refunds based on those deductions/exemptions.

Addressing a recent press briefing senior department officials said that many of the assesses work in Govt Departments, PSUs and prestigious IT companies.

Elaborating on the scam it was informed that a large number of such taxpayers work with companies based outside Andhra Pradesh and Telangana but have PAN based in Andhra Pradesh/Telangana.

Many employee taxpayers have claimed refunds of as high as 75% to 90% of the TDS deducted by the employer. 

Field inquiries suggest a trend that gullible employees get lured into claiming such wrongful refunds on the advice of intermediaries/peers, without realizing the consequences thereof said the department.

It added that recently, surveys on consultants/intermediaries were conducted, in which incriminating evidence about such malpractices has been found.

The persons admitted to having filed large numbers of returns with bogus deductions/exemptions and have gotten refunds of substantial amounts for their clients, in return for some commission.

Names of taxpayers for whom such returns were filed have been found recorded in their documents, which have since been impounded. 

On being questioned, some of the clients admitted to having wrongful refunds based on ineligible deductions/exemptions. 

Many such taxpayers have already filed Updated Returns and many more are in the process of doing so. Further, action against such consultants/intermediaries is also being initiated.

Under the Income-tax Act, 1961 (the ‘Act’) there are stringent consequences of misreporting of income and claiming wrongful deductions. The consequences include interest @ 12% per annum, penalty @ 200% of taxes, and prosecution which may entail imprisonment.


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