India Tax Authority Identifies 20,000 Cases of Improper Deduction Claims

The Income Tax Department of India has detected between 15,000 and 20,000 instances where taxpayers employed a “swapped provisions” strategy, claiming deductions or exemptions under provisions for which they were not eligible. Using data‑analytics and cross‑verification of employer filings, AIS and other records, the department flagged mismatches such as replacing House Rent Allowance claims with Section 10(14) allowances or swapping political‑party donation deductions for research‑institution donations. Taxpayers are being urged to review and correct their returns voluntarily, with the risk of interest, penalties or scrutiny for deliberate misuse.

Separately, under the new tax regime individuals with income up to ₹12.75 million can receive a rebate and standard deduction that may eliminate tax liability, but filing an Income Tax Return remains compulsory when total income exceeds ₹4 million (new regime) or ₹2.5 million (old regime), or when high‑value transactions occur. Filing provides proof of income for loans, visa applications, loss carry‑forward and other financial benefits, while non‑compliance can trigger notices and penalties.