Income Tax Notice alert! The Income Tax Department is cracking down on alleged misreporting of income by senior executives across multinational companies and startups. Several such executives earning over Rs 50 lakh have received tax notices from the IT Department.The tax department has alleged that in all these cases the income has either been underreported, misreported, or false exemptions have been claimed to reduce tax outgo.
Why Income Tax Notices Are Being Sent
The Income Tax Department has flagged cases involving non-disclosure of overseas assets and foreign income, understatement of stock-based compensation, and inflated claims of benefits such as accommodation and travel allowances aimed at lowering taxable income.According to officials quoted in an ET report, the Income Tax Department authorities have issued notices to these individuals — including chief executives and managing directors at multinational corporations — asking them to correct discrepancies in their filings before any action is taken.
Tax notices
Executives from industries including, information technology, fast-moving consumer goods, hospitality, engineering and construction, and automobiles have received such notices. Officials cited in the report said that several founders and senior leaders from startups have also attracted the tax department’s scrutiny.In many instances, the taxpayers are alleged to have sought tax relief by reporting bogus donations to religious bodies, charitable organizations, or educational institutions.We are examining more than two dozen cases involving investments in high-value properties, over 50 instances where substantial secondary income was received from foreign clients in cryptocurrencies, and cases featuring significant contributions to political parties that are neither officially recognized nor participating in elections, a senior official was quoted as saying.These irregularities came to light following closer scrutiny of income tax returns filed by high earners during the ongoing assessment period. Under its ‘Non-intrusive Use of Data to Guide and Enable (Nudge)’ initiative, the department has prompted several executives to submit revised returns to address inconsistencies.An official noted that some taxpayers assumed overseas acquisitions and holdings would escape detection. However, with the government getting important financial information through automated data-sharing arrangements and monitoring linked to the Permanent Account Number (PAN), concealing such foreign dealings has become far more challenging.Among the undeclared assets that have been identified are properties registered in the names of spouses and minor children, foreign equity investments, cryptocurrency-based income, and funds maintained in overseas bank accounts.The review also revealed a striking trend: many taxpayers represented by the same chartered accountants were contributing to identical institutions. The official added that separate proceedings are being initiated against those chartered accountants.This enforcement drive is part of the government’s wider effort to strengthen compliance through data-centric oversight. In recent years, authorities have increasingly relied on artificial intelligence-powered analytics to detect mismatches between reported income, tax deducted at source records, and information obtained from third-party financial sources.So far in the current financial year, over 2.1 million taxpayers have revised their returns for assessment years 2021-22 through 2024-25, resulting in additional tax payments exceeding Rs 2,500 crore. Additionally, more than 1.5 million returns have already been updated for the ongoing assessment year.In the 2026-27 Budget, the Center introduced a one-time six-month compliance window allowing individuals to disclose foreign assets. The measure is intended to offer relief to taxpayers, including professionals with unreported employee stock option holdings and students who continued to hold funds in overseas accounts.
