⚠️ CBDT Issues Strong Warning on Bogus Deductions – What Every Taxpayer Must Know (Dec 2025)
- Mayur Bhadani
- 3 minutes ago
- 3 min read
“That small deduction you claimed may now invite a big notice.”
On 13th December 2025, the Central Board of Direct Taxes (CBDT) released an important Press Release that every taxpayer in India must read carefully.
The message is clear: the Income Tax Department is actively tracking bogus deductions and donations — and taxpayers are being nudged to correct mistakes before it’s too late.
If you have ever:
Claimed donation deductions
Used agents or intermediaries to file returns
Received refunds unexpectedly
Filed returns with high deductions and low tax
👉 This blog is for you. Please read till the end.
🔍 What Triggered This Action by CBDT?
The Income Tax Department recently uncovered a nationwide network of intermediaries who helped taxpayers file returns with fake or inflated deductions and exemptions under the Income Tax Act.
These intermediaries:
Operated on commission basis
Filed returns using incorrect claims
Promised higher refunds to taxpayers
Most alarming finding?👉 Huge donations were shown to entities that don’t even exist properly on ground.
🚨 The Big Red Flags Identified by the Department
CBDT’s investigation revealed misuse of deductions related to:
❌ 1. Bogus Donations
Claims were made for donations to:
Registered Unrecognized Political Parties (RUPPs)
Charitable Trusts with:
No real activity
Fake or shared addresses
Non-functional operations
❌ 2. Refunds Based on Fake Claims
Taxpayers received undue refunds
Donations were used only to reduce tax, not for genuine charity
❌ 3. Bogus CSR Donations
Companies claimed fake CSR expenses
Evidence of circular transactions and fake receipts found
📊 How Is the Department Catching This?
This time, it’s not random scrutiny.
CBDT has deployed:
Advanced data analytics
Risk profiling
Pattern-based identification
Over 80,000 suspected cases have already been identified.
💡 Important:Many taxpayers involved may not have done this intentionally. Most relied on third-party agents.
🧠 CBDT’s Smart Move: A “NUDGE” Instead of a Notice
Instead of directly issuing notices, CBDT has launched a Targeted NUDGE Campaign.
What does this mean?
You may receive:
📱 SMS
📧 Email advisory
Asking you to:
Review your deductions
Correct mistakes voluntarily
File Updated Return (ITR-U)
🗓 Advisories started from 12th December 2025
✅ Relief for Honest Taxpayers
Here’s the positive side.
CBDT allows taxpayers to:
Revise current year ITR (AY 2025-26)
File Updated Returns for past years
Avoid:
Heavy penalties
Prosecution
Long-term litigation
👉 Voluntary correction = Lower risk
⚠️ Why You Should Act Now (Not Later)
If ignored:
The department may initiate enforcement action
Penalty + interest + possible prosecution
Explanation like “agent did it” may not be accepted
Remember:Responsibility of return = Responsibility of taxpayer
📌 What You Should Do Immediately
✔ Step 1: Review Your ITR
Check if you have claimed:
Donation deductions (80G, political donations, etc.)
High refunds without clear justification
✔ Step 2: Verify Donation Details
Ensure:
Entity is genuine
Donation is actually paid
Receipts are authentic
Purpose is legitimate
✔ Step 3: File Updated Return if Needed
Correct mistakes
Pay differential tax
Close the matter peacefully
📱 Keep Your Contact Details Updated
CBDT has clearly advised:
Ensure correct mobile number
Ensure active email ID in your Income Tax profile
Missing communication may mean missing the chance to correct errors.
🌐 Official Reference
For detailed legal provisions and updated return filing:👉 www.incometax.gov.in
🧾 Final Thought from a Tax Professional
If a deduction looks “too good to be true”, it usually is.
This CBDT press release is not meant to scare — it’s meant to protect honest taxpayers by giving them a chance to correct mistakes before strict action begins.
📌 If you are unsure about any deduction claimed in your return, now is the best time to review it.