Tax season can be stressful, and the promise of a big refund can sound tempting. But a warning from tax expert CA Nitin Kaushik highlights a dangerous new scam: the “tax refund trap.”
Some tax consultants are luring clients with offers of “extra refunds.” The trick is simple: they artificially inflate your refund by manipulating your deductions or income figures. They then take a cut, often 10%, of that boosted amount. While you might get a bigger refund upfront, this is a ticking time bomb.
The Income Tax Department now uses AI to cross-verify every return against your Form 16, Annual Information Statement (AIS), and Taxpayer Information Summary (TIS). Mismatches are flagged for future audits.
If you get caught, the consequences are severe:
- The entire inflated refund is clawed back.
- A 200% penalty is levied on the underreported income.
- You’ll be charged 1% interest per month on the shortfall.
- Your taxpayer profile is red-flagged, leading to more scrutiny on all your future filings.
As Kaushik warns, “One wrong refund isn’t free money—it’s a future liability in disguise.” Always prioritize ethical tax filing over risky shortcuts. If a refund sounds too good to be true, it almost certainly is.