The Income Tax Department has intensified its scrutiny of salary related tax filings, asking employers to proactively review discrepancies in payroll records as part of a wider effort to improve compliance and curb incorrect deduction claims.
The latest advisory encourages organisations to reconcile information submitted through Form 24Q, the quarterly return for tax deducted at source (TDS) on salaries, with employees' income tax filings. Officials believe early identification of inconsistencies will help employers minimise reporting errors and reduce the likelihood of future tax disputes.
The move follows the department's ongoing review of revised income tax returns, where it has reportedly found cases of taxpayers altering deduction and exemption claims after discrepancies were flagged. In several instances, taxpayers shifted from one exemption category to another, including changes involving House Rent Allowance (HRA) and other tax exempt allowances, while paying only marginal additional tax.
Tax authorities have shortlisted 15,000 to 20,000 cases for detailed examination where data analytics identified potential mismatches between employer filings and individual tax returns. Rather than relying solely on enforcement, the department continues to use its compliance focused 'Nudge' approach, encouraging taxpayers to voluntarily rectify inaccuracies before further action is initiated.
Officials have also cautioned employers against the growing influence of unauthorised tax consultants who allegedly persuade salaried individuals to claim ineligible deductions or inflated exemptions. With the department increasingly using technology driven data matching across multiple financial databases, such inconsistencies are becoming easier to detect.
For HR, finance and payroll teams, the advisory underscores the importance of strengthening payroll governance, conducting regular reconciliation of salary records and ensuring accurate TDS reporting. As tax compliance becomes increasingly data driven, organisations are expected to adopt more rigorous internal verification processes to safeguard both employees and businesses from avoidable regulatory challenges. |
