Tax season is a busy time, not just for taxpayers but also for fraudsters looking to exploit unsuspecting individuals to execute tax scams in India.
Scammers often disguise themselves as tax officials or professional preparers, using deceptive tactics to steal sensitive financial information.
From phishing emails to fake calls demanding payments, these frauds can lead to significant financial losses and legal trouble.
To help you stay protected, here is a list of common tax scams and simple ways to identify and avoid them.
Being aware of these fraudulent schemes is the first step toward safeguarding your hard-earned money..
Common Types of Tax Scams in India
Tax scams in India begin when scammers impersonate themselves as Income Tax Department (ITD) agents or tax preparers. They, via multiple means, attempt to steal your personal information through one of the methods listed below.
Here is the list of types of tax scams that you must be aware of:
- Phishing Email Asking for Verification
Now, this is the most common way by which scammers reach out to steal your personal information. In this, the scammer sends you an email with a subject line creating a sense of urgency.
They use a logo that mimics the original ITD logo. Thinking it is authentic, you open and click on the link provided. That link redirects you to a webpage that looks exactly like the ITD webpage, asking to fill in personal and sensitive information.
In all, by completing the process, you unknowingly provided access to his or her bank account and other financial data.
Now, to avoid getting trapped in such a scam, one must always double-check the email address and URL on the webpage.
Also, in case the ITD department is asking for any updates, it is always better to open their website to log in and enter details instead of clicking on any link. - Fake Calls Demanding Money
With the growing AI technology, it is no longer difficult to use technology to make calls using fake voices. With AI bots, scammers can send thousands of messages and make calls, pretending to be from the ITD.
As soon as you answer the call, they will create a sense of urgency to make an incomplete payment to proceed with your tax payment application.
Other than this, they may ask for some sensitive information related to your bank payment on call that could wipe off your capital from your bank account.
In case you ever receive such calls, it is important to know that the ITD never makes such calls. But even if you receive such calls that sound genuine, always double-check their identity. You can ask for a reference number to validate the caller - Tax Identity Theft
Now, to file a tax return, one only requires one’s name, Social Security Number (SSN), and date of birth. With social media, most of the information is available to the public. Hence, it is easier for scammers to steal your identity.
Scammers use your name to submit tax filing documents with inflated deductions or false income to claim large tax refunds from the ITD.
To get the refund, they change the bank account details too.
However, when you later file your legitimate tax return, the ITD system flags it because a return has already been filed under your SSN.
You receive a notification from the ITD stating that your tax return cannot be processed because “someone else has already filed” under your identity.
To avoid this, set up an Identity Protection PIN (IP PIN). This serves as your password and helps you to secure your return. - Ghost Tax Preparation Scam
The Ghost Tax Preparation Scam is a type of fraud where an unethical tax preparer completes your tax return but does not sign it as required by law.
These scammers often make false promises of big refunds and may commit fraud using your tax information. For the same, they ask for payment, generally in cash.
Most of them don’t even provide a receipt or provide a fabricated receipt.
After receiving the payment, they vanish, leaving the taxpayer responsible for any issues with the ITD. For this, the ITD held you accountable and imposed penalties.
To avoid this, always file your tax with a reputable and known tax preparer. Never fall for the greed of high returns, and never make any payment in cash. - Fake ITD Messages
They trap people in an ITR return scam by offering them a high returns or sending messages with the confirmation of return approval
Many times, scammers reaching out to you through fake messages saying the recalculation of your return and claiming an extra refund.
To get the refund, they provide you the link that redirects you to the page asking for certain details, including financial data, by which they steal access to your bank account.
The only way to avoid falling into such a trap is to never trust such messages. In case the ITD needs to inform you of anything regarding the same, they always do so by official letter sent to your postal address.
How to Report Tax Scams in India?
If you have been a victim of tax scams, then there are multiple ways to report it. It is advisable to take quick action to avoid any kind of legal consequences along with financial distress.
- Report to the Income Tax Department
You can inform the scam to the income tax department by sending an email to their official mail id. Other than this, you can submit a complaint on their web portal. Also, you can directly file it by calling them on their helpline number: 1800-180-1961 - Report to GST Authorities (For GST Frauds)
For GST-related fraud, visit the GST Grievance Redressal Portal to register your complaint. - File a Cyber Crime Complaint
For online tax scams, report the concern at the cybercrime portal. You can visit the nearest cyber cafe or file it by registering to their website.
Conclusion
Tax scams are on the rise, and fraudsters are constantly finding new ways to steal personal and financial information.
From phishing emails and fake ITD calls to identity theft and ghost tax preparers, scammers are using sophisticated techniques to deceive taxpayers.
The consequences of falling for these scams can be severe, leading to financial losses, delayed refunds, or even legal trouble.
To stay safe, always be cautious when receiving emails, calls, or messages claiming to be from the ITD.
Never share sensitive information without verifying the source, and file your taxes through a trusted and registered tax preparer.
Setting up an Identity Protection PIN (IP PIN) and staying updated on ITD guidelines can further help safeguard your tax return.
By staying informed and vigilant, you can protect yourself from becoming a victim of tax fraud this season.
