The Income Tax Department has stepped up scrutiny of senior executives earning more than Rs 50 lakh annually, issuing notices over suspected underreporting of income and improper claims of tax exemptions. Authorities have flagged multiple cases involving non-disclosure of overseas assets, foreign income, understatement of stock-based compensation and inflated claims for allowances such as housing and travel to reduce taxable income.
According to officials cited in reports, notices have been sent to individuals — including CEOs and managing directors at multinational companies — asking them to review and correct discrepancies in their tax filings before further action is initiated.
Executives across sectors such as information technology, FMCG, hospitality, engineering and construction, automobiles, as well as startup founders and senior leadership, are among those under scrutiny.
In several cases, taxpayers are suspected of claiming deductions through bogus donations to religious institutions, charities or educational organisations. Officials are also examining more than two dozen instances involving high-value property investments, over 50 cases of substantial foreign income received — including cryptocurrency payments — and contributions to political entities that are not officially recognised.
The irregularities surfaced after detailed analysis of income tax returns filed by high earners during the current assessment cycle. Under the department’s “Nudge” initiative — Non-intrusive Usage of Data to Guide and Enable — many executives have been encouraged to file revised returns to resolve inconsistencies.
Officials noted that some taxpayers believed overseas assets would remain undiscovered, but automated data-sharing arrangements and PAN-linked monitoring have made concealment increasingly difficult. Identified undisclosed holdings include foreign bank accounts, overseas equity investments, crypto income and assets registered in the names of spouses or minor children.
The review also revealed patterns where multiple taxpayers advised by the same chartered accountants claimed donations to identical institutions, prompting separate proceedings against certain advisors.
The enforcement drive forms part of the government’s broader push toward data-driven compliance, with authorities increasingly relying on AI-based analytics to detect mismatches between reported income, TDS data and third-party financial information.
So far this financial year, more than 21 lakh taxpayers have revised returns for assessment years 2021-22 to 2024-25, resulting in additional tax payments exceeding Rs 2,500 crore. Over 15 lakh returns have already been updated for the current assessment year.
In Budget 2026-27, the government also announced a one-time six-month compliance window allowing individuals to disclose foreign assets. The measure aims to provide relief to taxpayers, including professionals with unreported ESOP holdings and individuals maintaining funds in overseas accounts.
Income Tax Notice Alert: Why Top Executives Earning Over Rs 50 Lakh Are Facing Scrutiny
