Income Tax Department flags bogus deduction claims using data analytics; know how technology tracks tax fraud
The Income Tax Department has detected several cases of wrongful tax relief and deduction claims through advanced technology, rigorous verification exercises, enforcement actions, and data analytics, the Finance Ministry informed the Lok Sabha.
These cases were corroborated through surveys and thorough searches of entities, individuals and intermediaries suspected of facilitating fraudulent claims. The details were provided by Pankaj Chaudhary, Minister of State for Finance, in a written reply to several unstarred questions in the Lok Sabha on 3 August.
Data analytics framework flags tax evasion risks
The Central Board of Direct Taxes (CBDT) has enhanced its technology-based monitoring system by conducting intensive research and analyzing information from multiple sources. These include Statement of Financial Transactions (SFT), TDS and TCS records, GST data, high-value bank transactions and property registration details.
The Finance Ministry explained that the CBDT’s in-house analytics system “assimilates and analyses information as well as transactional data received from third parties” to promptly identify potential tax evasion and errors in submitted details.
The reply added that the department applies risk-based rules to scrutinize tax returns, audit reports and third-party filings to detect discrepancies, including inaccurate reporting of income or excessive exemption claims. Risk parameters are regularly updated and refined to improve the accuracy of compliance checks.
SAKSHAM NUDGE campaign boosts voluntary compliance
To encourage taxpayers to rectify discrepancies, CBDT has rolled out the ‘NUDGE’ (Non-intrusive Usage of Data to Guide and Enable) campaign under the ‘SAKSHAM’ framework.
This initiative combines data analytics, behavioural insights and digital communication to promote preventive compliance.
The official reply also outlined the outcomes of the SAKSHAM NUDGE campaigns during FY 2024-25 and FY 2025-26.
CBDT said the campaigns were supported by nationwide outreach programmes to help improve compliance and ensure that taxpayers voluntarily rectify discrepancies by submitting revised, belated or updated returns.
Eye on individuals involved in tax-related fraudulent activities
The department has also enhanced coordination with other enforcement agencies through the Regional Economic Intelligence Councils (REICs) platform and the Nodal Officer mechanism. Investigations have identified intermediaries, including tax return preparers and chartered accountants, who facilitate fraudulent claims.
The actions taken include e-verification, searches, surveys, reassessments, penalties and prosecution, wherever applicable. With greater use of analytics, digital tools and inter-agency coordination, the tax department is moving towards a more transparent compliance system while curbing misuse of tax benefits.
For more details, visit the official website of Digital Sansad at: https://sansad.in/getFile/lsapps/loksabhaquestions/annex/188/AU2494_tahX1k.pdf?source=lsapps
