New Delhi, July 14 -- Every year, many taxpayers are tempted to inflate or falsely claim deductions in their income tax returns to reduce their tax liability. This could include claiming deductions for investments that were never made, overstating medical or education expenses or submitting fabricated receipts.

While such claims may seem like an easy way to save tax, they can have serious consequences under the Income-tax Act. Depending on the nature of the default, such taxpayers may be subjected to hefty penalties, prosecution or even imprisonment in case involving willful tax evasion.

The income tax department has become increasingly data-driven and uses information from employers, banks, financial institutions and documents such as ...