Introduction

As financial year gets ended in the month of March, preparation for Income Tax Return (ITR) filing gets started where department and taxpayers both have to work upon various aspects. Department generally releases ITR forms during May or June and taxpayers compile the documents and rush towards their CAs for ITR compliances. Indian income tax law is considered to be one the most complex tax laws in the world and it is obvious that many complications will be faced by taxpayers for such ITR filing compliances.

To avoid unnecessary hustle, we have simplified the document compilation process for the taxpayers which can be very useful during ITR compliances. Documentary requirements for various ITR forms are different. It is best to discuss the summary of transactions carried out during the financial year with your CAs or advisors and they will suggest a proper ITR form to be filed based on the transactions carried out during the previous year.

Important Documents for ITR 1

Person required to file ITR 1 (Gross income upto ₹50 lac)

1. Income from Salaries
2. Income from House Property
3. Income Other Sources
4. Income from Long term capital gains (listed securities as per section 112A upto ₹1.25 lacs)

 

Required Documents for ITR 1

1. PAN and Aadhaar number
2. Form 16 from Employer
3. AIS (Annual Information Statement) and TIS (Tax Information Statement)
4. Interest Certificates for saving bank accounts
5. Interest certificates and Account Statements for housing loan
6. Profit and Loss statement for Demat Account (if any)

 

Note: Form 16 should be accompanied with Form 12BA for arriving the values of various perquisites which are included in the salary. Moreover, if there are more than 2 employers during a financial year or more than a single house property income then ITR 2 shall be applicable. Further, if any investments in foreign assest will be carried out during a financial year then also, ITR 2 will be applicable.

 

Important Documents for ITR 2

Person required to file ITR 2 (Gross income above ₹50 lac)

1. Income from Salaries (more than 2 employers)
2. Income from House Property (more than 1 house property)
3. Income Other Sources
4. Income from Capital gains (including crypto asset)

 

Required Documents for ITR 2

1. PAN and Aadhaar number
2. Form 16 from Employer
3. AIS (Annual Information Statement) and TIS (Tax Information Statement)
4. Interest Certificates for saving bank accounts
5. Interest certificates and Account Statements for housing loan
6. Profit and Loss statement for Demat Account (if any)
7. Foreign Investment and Income statement
8. Holding statement of Foreign Assets as on 31^st December
9. Profit and Loss statement of Crypto Assets
10. Details of Capital Assests which are sold during previous year

 

 

Important Documents for ITR 3

Person required to file ITR 3

1. All Income types as per ITR 2
2. Income from Business and Profession

 

Required Documents for ITR 3

1. PAN and Aadhaar number
2. Form 16 from Employer
3. AIS (Annual Information Statement) and TIS (Tax Information Statement)
4. Interest Certificates for saving bank accounts
5. Interest certificates and Account Statements for housing loan
6. Profit and Loss statement for Demat Account (if any)
7. Foreign Investment and Income statement
8. Holding statement of Foreign Assets as on 31^st December
9. Profit and Loss statement of Crypto Assets
10. Details of Capital Assests which are sold during previous year
11. Financial Statements of the Business or Profession carried out during the previous year
12. Capital account statement from the Firms in which partnership interest was available during previous year

 

 

Important Documents for ITR 4

Person required to file ITR 4

1. All Income types as per ITR 1
2. Income from Business and Profession – Presumptive Scheme benefit

 

Required Documents for ITR 4

1. PAN and Aadhaar number
2. Form 16 from Employer
3. AIS (Annual Information Statement) and TIS (Tax Information Statement)
4. Interest Certificates for saving bank accounts
5. Interest certificates and Account Statements for housing loan
6. Profit and Loss statement for Demat Account (if any)
7. Financial Statements of the Business or Profession carried out during the previous year
8. Capital account statement from the Firms in which partnership interest was available during previous year

 

 

Important Documents for Deductions

Taxpayers who are willing to opt old scheme of taxation shall be required to have following document while complying with ITR filing requirements.

Required Documents for claiming deductions under old scheme of taxation

1. Invoice or Receipts to claim deductions under section 80C (such as LIC, PPF, NPS, Educational Fees etc)
2. Health insurance invoice for claiming deduction under section 80D
3. Interest certificates for claiming deductions under section 80E
4. Donation receipts for claiming deductions under section 80G and 80GGC
5. Invoice or Receipts for claiming any other deductions as per chapter VI of Income Tax Act, 1962

 

 

Conclusion

It is very important to figure out the proper ITR form to be required to file based on the transaction and nature of the activities carried out during the previous year. CAs or Advisors are the best person who will guide to determine the proper ITR form which should be filed based on the information made available to them. It is important to note that wrong selection of ITR will cause significant challenges where wrongly filed ITR would be considered as Defective ITR under section 139(9) of the Income Tax Act, 1962 and notice of the same would be issued to the taxpayers. Moreover, ITR should be filed within due dates mentioned under section 139(1) of the Income Tax Act, 1962 to carry forward the losses from business or capital gains for future years.

 

Disclaimer:

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

IT Department Launches Nationwide Crackdown on Bogus Tax Deductions

The Income Tax Department of India has launched an aggressive crackdown on fraudulent deduction claims in Income Tax Returns (ITRs). Powered by AI and advanced data analytics, this crackdown is now targeting suspicious claims under specific deduction sections—some of which have been commonly misused by both individuals and intermediaries.

Here’s what you need to know to stay safe and compliant.

What’s Triggering the Crackdown?

A sharp rise in false or exaggerated claims made under various sections of the Income Tax Act has prompted the government to act. Fraudulent practices—often facilitated by unverified intermediaries—are now being flagged by the Income Tax Department’s advanced detection tools.

The crackdown focuses on deductions claimed under the following sections:

Sections Under Scrutiny:

• Section 10(13A) – House Rent Allowance (HRA)
• Section 80GGC – Donations to political parties
• Section 80E – Interest on education loans
• Section 80D – Health insurance premiums
• Section 80EE – Interest on home loans for first-time buyers
• Section 80EEB – Interest on loans for electric vehicles
• Section 80G – Donations to registered charities and relief funds
• Section 80GGA – Donations for scientific research and rural development
• Section 80DDB – Medical treatment for specified critical illnesses

Many of these claims were found to be either inflated or entirely bogus—submitted with fake documents or no proof at all.

AI-Powered Monitoring & Real-Time Cross-Verification

The Income Tax Department is now leveraging AI and data analytics to automatically flag suspicious deduction patterns across thousands of returns. Real-time cross-verification has also been implemented to compare taxpayer claims with actual data from:

• Banks and financial institutions (for loan interest and repayments)
• Insurance companies (for policy premium verification)
• Employers (for rent and HRA)
• Recognized donation platforms and political party disclosures

If a claim doesn’t match backend data, the taxpayer may receive a notice or demand.

Examples of Fraudulent Practices Being Flagged

1. Fake HRA Claims (Section 10(13A)): Claiming rent deductions using fictitious landlords or PANs.
2. Bogus Political Donations (Section 80GGC): False declarations to inflate refund amounts.
3. Fake or Inflated Education Loan Interest (Section 80E): Claiming deductions for non-existent loans.
4. Unsubstantiated Medical Claims (Section 80DDB): Claims without medical certificates or treatment proof.
5. Misuse of Health Insurance (Section 80D): Deducting for lapsed or ineligible policies.
6. Invalid Home Loan or EV Loan Interest (Sections 80EE & 80EEB): Claiming interest deductions without ownership or valid financing.
7. Questionable NGO Donations (Section 80G, 80GGA): Submitting receipts from unapproved or blacklisted institutions.

Legal & Financial Consequences

The Department has already taken action in major cities like Mumbai, Delhi, Jaipur, and Ahmedabad. Hundreds of notices have been served, and several searches and surveys have been conducted under Sections 132 and 133A of the Income Tax Act.

Penalties for false deduction claims may include:

• Demand for repayment of refunds with interest and penalties
• Prosecution under Sections 276C (evasion) and 277 (false statements)
• Imprisonment, in extreme cases

What Taxpayers Should Do Immediately?

• Recheck Your ITR: Ensure that all deductions claimed are accurate and fully supported by documentation.
• Avoid Dubious Tax Advisors: Stay away from intermediaries who guarantee high refunds by misusing deduction sections.
• File an Updated Return (ITR-U): If you realize an error, you can correct it voluntarily through the ITR-U mechanism to minimize penalties.
• Preserve Proof: Maintain receipts, loan sanction letters, insurance policies, and donation certificates for at least 6 years.

Deadline to Act

You can file an Updated Return (ITR-U) for Financial Year 2023–24 up to March 31, 2026. This gives taxpayers a chance to rectify mistakes without attracting harsher consequences—but the longer the delay, the higher the interest and penalties.

Final Takeaway

The Income Tax Department’s message is clear: fraudulent deductions won’t go unnoticed. With technology closing the loopholes, it’s time for every taxpayer to clean up their returns and ensure compliance.

Transparency is not just good practice—it’s now a legal necessity.

Read the source of this post by clicking here.

Disclaimer:

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.