IT Refund Scam Revealed; Employees From Big Companies Fooled Income Tax Dept!

A practicing CA from Bengaluru allowed IT professionals to get massive tax savings using fraudulent means.


IT Refund Scam Revealed

A major Income Tax refund scam to the tune of Rs 18 crore has been unearthed, in which thousands of employees from reputed IT firms claimed tax rebates via illegal means.

These employees used the tax rebate under ‘Loss to House Property’ clause, whereas they didn’t actually undergo any loss, but claimed massive tax refund to the tune to Rs 2,00,000, per year.

Rs 2,00,000 is the maximum rebate allowed by Govt. under genuine cases of ‘Loss to House Property’ while filing tax returns.

How Was This Scam Discovered?

The scam was unearthed when an investigation wing of the Income Tax Department accidentally raided the premises of a practicing chartered accountant in Bengaluru, under another case.

When the documents and the IT return forms were studied, they discovered how this CA fooled IT Dept., and allowed IT employees to save massive tax.

Around 1000 employees had used the ‘services’ of this CA, and they belong to companies like IBM, Vodafone, SAP Labs, Biocon, Infosys, ICICI Bank, CISCO, Thomson Reuters India Limited.

Total amount of this scam has been reported as Rs 18 crore; which means on an average, every employee from the database of 1000 had claimed tax rebate of Rs 18 lakh each.

As we write this, Income Tax officials are questioning the employees, and getting more information regarding the tax fraud.

An official from the IT Dept. in Bengaluru said,

“The employees claim that the CA told them he can get refund for them by making some claims. They have also deposed that, out of the refund received, the auditor had charged 10% as incidental charges. Some WhatsApp messages with auditor were also shown by them as supporting evidence,”

How Exactly This Scam Happened?

When a person lives in his own owned home, for which he is paying monthly installments as well, then that person is not deriving any income from that home; and this loosely translates to loss.

Accountants exploit this vulnerability and encourage tax-payer clients to claim tax rebate under loss to house property.

Last year, Govt. has limited total tax rebate from this ‘loss to property’ to Rs 2,00,000 per financial year.

Genuine losses from house property can instances of any incident or accident which damaged any part of house and then money was spent to repair it, depreciation in the value while selling etc.

Income Tax Dept. has issued a strict warning against using any fraudulent method to claim tax rebate, and has said that heavy penalty, besides jail term can be imposed.

A statement from IT Dept. said,

“All taxpayers are requested to be highly alert to fraudulent schemes like the present one. Such fraudulent schemes will invariably be caught out and will result in penal action on the taxpayer,”

On a side-note, do you think IT Dept. has been a bit harsh on salaried employees on this issue? At a time when big sharks are getting away, looting hundreds of crores from the banks (read Vijay Mallya), then such small ‘extravaganzas’ to save some tax should be severely punished?

Do let us know by commenting right here!

  1. A N V RAMANI says

    It is true that a person lim Vijay Mallya has cheated the government to the tune of several crores. This does not give permission to any assessee to defraud the govt. Today the system has become very strong and hence one cannot escape the net.

  2. Vijay says

    Bit obvious Dept guys will get few bucks from 2lac saved so not interested. From Mallya types they make Lacs n Crores so let them go. It’s the small is beautiful and trapped theory you c…….

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