Claiming Fake Deductions in ITR? You Could Face 200% Penalty & Legal Trouble – Here's the New Rule
🚨 Major ITR Rule Update: False Claims Can Cost You Big
The Income Tax Department has uncovered a shocking scam involving over 90,000 salaried individuals who allegedly made fake tax deduction claims, causing a revenue loss of ₹1,070 crore to the government. In response, the department has tightened rules for ITR filing this year, making fraudulent deductions nearly impossible.
🔍 What’s New in the ITR Forms?
With the latest changes to ITR-1 and ITR-4 forms, taxpayers must now submit verifiable proof for any tax-saving deductions claimed under various sections. Here’s a breakdown of the updated rules:
✅ Section 80C (LIC, PPF, ELSS, etc.)
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Just entering the investment amount is no longer enough.
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Mandatory fields now include:
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Policy Number or Document ID
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✅ Section 80D (Health Insurance)
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Must provide:
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Name of Insurance Company
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Policy Number
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✅ Section 80E/80EE/80EEA/80EEB (Education, Home & EV Loans)
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You now need to furnish:
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Lending institution’s name
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Loan account number
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Sanction date
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Vehicle registration number (for EV loan)
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📌 Old Trick Alert: The days of claiming large deductions without proof are over.
🧾 How Will the Tax Department Catch You?
The department now uses the Annual Information Statement (AIS), a powerful tool that aggregates financial data and auto-verifies deduction claims. This means:
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False entries can be easily flagged
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Compliance enforcement will be stronger
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Accountability will increase
⚠️ What If You Break the Rules?
Failing to provide valid documentation for claimed deductions could lead to:
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💸 200% penalty on the unpaid tax amount
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📈 24% annual interest on the due tax
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⚖️ Legal proceedings under Section 276C, which may result in court visits and further penalties
🧠 Why You Must Be Extra Careful This Year
With the income tax filing deadline approaching and AI-based verification tools getting smarter, taxpayers are advised to:
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Keep all investment receipts, loan documents, and policy certificates handy
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Double-check all entries before submitting the return
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Consult a tax expert if unsure about deductions
🚀 Final Words
The government is making ITR compliance stricter than ever to plug revenue leaks. Honest taxpayers have nothing to worry about, but those trying to game the system may end up paying double the price—both in money and in legal headaches.
