Exemptions and tax concessions under the Income-tax Act, 1961 (‘Act’) are provided in accordance with the provisions of the Act. However, any exemption or tax concession wrongly claimed in the returns of income filed by the tax payers are liable to be detected during processing of such returns or their scrutiny.

The monitoring mechanism prevalent for detection of such cases as of now includes system of Audit (both Internal and C&AG) and inspections/reviews done by supervising authorities. No such data is maintained for the number of cases arising therefrom and action taken theron and the outcome therefrom in a centralized manner.

This information was given by the Union Minister of Finance, Shri Arun Jaitley in written reply to a question in Lok Sabha today.

Tax exemption compliance failures: detection occurs through return processing and audits, yet centralized monitoring of cases is absent Irregular claiming of exemptions and tax concessions under the Income-tax Act is liable to be detected during return processing or scrutiny. Oversight depends on internal audits, C&AG audits and inspections/reviews by supervising authorities, but no centralized data is maintained on detected cases, actions taken or outcomes, limiting consolidated monitoring.