The Income Tax Department is using the Annual Information Statement (AIS) to keep track of the income and expenditure of salaried taxpayers. Artificial Intelligence (AI) is also being used in this. This has affected the salaried taxpayers
The Income Tax Department has increased its strictness against cases of fake deduction claims. It is using Annual Information Statement (AIS) to keep an eye on the income and expenditure of salaried taxpayers. Artificial Intelligence (AI) is also being used in this. This has affected the salaried taxpayers. Taxpayers are being cautious in filing income tax returns for the financial year 2024-25.
Strict action against fake deduction claims
Vivek Jain, partner, Tax Connect Advisory, said, “Earlier the Income Tax Department did not keep much eye on salaried taxpayers. But, the situation has changed in the last few years. There are reports of strict action by the IT Department against fake claims of deduction. Due to this, now taxpayers are claiming deduction only when they have evidence to prove it. They do not want any kind of deficiency in their documents.”
Disclosures have also been increased in income tax forms
Chartered accountant Akhil Pachauri said, “Many salaried taxpayers used to increase the donation amount. This used to happen especially in the case of donations to political parties. This year, there is a lot of increase in donation claims. The fear of income tax notices and raids can be the reason for this.” The Income Tax Department has also increased disclosures in the new ITR forms. In these, detailed information has been made mandatory for claiming section 80C, 80D and house rent allowance.
Taxpayers’ interest increased in the new tax regime
Many taxpayers have started using the new income tax regime to avoid the hassle of claiming deductions. The new regime does not provide the benefit of most deductions. But, it is very easy to use. There are more tax slabs in it. Using the new regime is beneficial for most taxpayers. In this, their tax liability becomes less. The government also wants to bring as many taxpayers as possible under the new regime. Many salaried taxpayers are filing returns in the new regime this time despite selecting the old regime in April 2024.
In FY2024, 70% of taxpayers used the new regime
In the financial year 2023-24, more than 70 percent of taxpayers used the new regime. According to an estimate, this number may increase further in this financial year. Many chartered accountants said that salaried taxpayers are allowed to change the regime every year. Many taxpayers are taking advantage of this rule. They are selecting the new regime at the time of filing returns. If more TDS has been deducted from such taxpayers, then they will get a refund.
