Tax practitioners warn that deduction claims of Nagpur taxpayers are likely to go under stricter scrutiny before refunds are released. This follows the Central Board of Direct Taxes’ (CBDT) scrutiny of bogus deduction claims, following action against organised tax evasion networks across the country, including in Vidarbha’s Gondia and Buldhana districts. It has cast a long shadow over this year’s Income Tax Return (ITR) processing. The department had unearthed organised bogus deduction claims in several parts of the country, including Vidarbha, leading to penalties, additional tax demands and updated returns.

 

Tax professionals said the enforcement drive has prompted the CBDT to adopt a more rigorous approach while processing returns this year, making accurate disclosures and supporting documents more important than ever. Returns filed by Nagpur taxpayers will now be processed by the Centralised Processing Centre (CPC), Bengaluru, under Section 143(1) of the Income-tax Act. Chartered Accountants said taxpayers with correctly filed and e-verified returns generally receive refunds within about a month of processing. However, even minor discrepancies could delay refunds as deduction claims undergo closer verification. According to tax practitioners, mistakes relating to Form 10E, house property income, rental income, housing loan interest, insurance premium deductions, provident fund contributions and other deduction claims remain among the most common errors. Mismatches between the Income Tax Return and Form 26AS, the Annual Information Statement (AIS) and Taxpayer Information Summary (TIS), incomplete bank validation, pending PAN-Aadhaar linkage, failure to complete e-verification and technical discrepancies are also likely to delay refund processing.

 

Experts advised taxpayers to regularly monitor the Income Tax Department’s e-filing portal, registered email addresses and mobile numbers for notices, verification requests, communications from jurisdictional assessing officers in scrutiny cases and rectification notices under Section 154 of the Income-tax Act. Prompt compliance with such communications, they said, can help avoid unnecessary delays. Tax practitioners further pointed out that the extension of the ITR filing deadline for eligible non-audit taxpayers till August 31 means the final tax compliance picture for Nagpur will emerge only after the extended due date, unlike previous years when July 31 marked the close of the filing season. The current filing cycle is also the last to follow the assessment year system linked to Financial Year 2025-26. From the next cycle, taxpayers will file returns under the new ‘tax year’ introduced through the Income Tax Act, 2025, replacing the decades-old assessment year concept. With the filing season gradually giving way to the audit season, professionals said businesspersons and other taxpayers whose accounts require audit should ensure complete disclosures and accurate financial information while filing returns and submitting records to their Chartered Accountants. They said the department’s focus this year means timely filing alone may not be enough, with the accuracy of every claim likely to determine how returns are processed and refunds are issued.