If you’ve provided false information or shown fake deductions in your Income Tax Return (ITR) in the hope of receiving a higher refund, this news may be disturbing. The Income Tax Department is now cracking down on taxpayers who have resorted to false information to evade taxes. The department has made it clear that those attempting to fraudulently obtain refunds will not only lose their refunds but also face a fine of up to 200% of the tax amount and a jail sentence. This article will explain the serious legal consequences and the government’s new “NUDGE” campaign, which can help you avoid significant losses in time.
Salaried Class and Freelancers Now on the Radar
Investigations by the Income Tax Department over the past few months have revealed a shocking revelation. The department has found that a large number of salaried employees and freelancers, lured by some greedy agents, are showing fake investments and expenses in their ITRs. Whether it’s fake house rent receipts (HRA) or false claims under Sections 80C and 80D, the department is now scrutinizing every file. Income tax officials say that with the help of data analytics and AI, it’s now much easier to detect these discrepancies. Those who thought they could get away with minor manipulations are now in trouble, as the department is taking strict action on all such files.
Sections 270A and 276C
The Income Tax Act is very strict, and a lack of information can land you in serious trouble. There are two main situations where the department takes strict action. The first is underreporting, which means underreporting your actual income. This attracts a 50% penalty. However, those who deliberately provide incorrect information, also known as misreporting, face a hefty penalty of 200%.
Furthermore, Section 276C criminalizes such fraudulent activities. This not only carries a heavy fine, but in serious cases, the taxpayer can also face rigorous imprisonment. Additionally, interest is charged at a rate of 24% per annum on the outstanding tax, which can severely impact a person’s financial situation.
Have you also received an SMS or email
To give taxpayers one last chance, the Finance Ministry has launched the “NUDGE” campaign. The purpose of this campaign is to alert those whose returns have been found to have discrepancies. Starting December 12, 2025, the department has started sending alert messages to the registered mobile numbers and email IDs of identified taxpayers.
This is an advisory that gives you the opportunity to file your updated ITR and remove any errors or fraudulent claims. If you’ve received such a message, ignoring it could be a major mistake. This message indicates that your file is under departmental scrutiny, and failure to correct it could result in a penalty notice or scrutiny.