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Big 4 Partners, senior professionals, retirees get Income Tax Notices

Equity partners and several senior professionals are under the Income Tax (I-T) department's microscope. The reason? Just “Large Amounts Of Income” shown as exempt in their tax returns for FY 2023-24.

TheFinanceStory by TheFinanceStory
Published date: 15th September, 2025
Last edited date: 20th September, 2025
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Big 4 Partners, senior professionals, retirees get Income Tax Notices
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  • As reported by Economic Times, the I-T department has sent scrutiny notices to several senior professionals — including Big 4 equity partners, large partnership members, and even retired executives.
  • The trigger? Declaring “too much” exempt income in their FY24 returns.
  • And the notices? They started rolling out from mid-August 2025.
  • But why suddenly?

First, what is Exempt Income?

Exempt income isn’t a loophole, it’s legally tax-free under Section 10 of the Income Tax Act.

It includes:

  • Share of profits from partnerships (already taxed at the firm level)
  • Provident fund (PF) and gratuity payouts
  • Agricultural income
  • Government-backed schemes like the Public Provident Fund (PPF)

Taxpayers report these under Schedule EI of their ITR for transparency.

Why is standard practice raising red flags? 

For years, equity partners in Big 4 firms have routinely declared exempt income in their returns.

These claims were accepted without issue — they were within the law and considered standard practice.

Now, the same declarations are landing professionals in scrutiny.

According to ET:

The claims of large amounts of exemption seem to have been one of the criteria for selection for scrutiny.

Experts said scrutiny of cases of exemption income above ₹50 lakh are being picked up.

Ashish Karundia, founder of Ashish Karundia & Co, told ET. “The intent behind Schedule EI was transparency, not to become a trigger for automated tax audits.”

He explains that much of the information flagged during these scrutiny proceedings is already in the tax department’s database.

Instead of targeted checks, the department appears to have set a sweeping filter.

Also read: IT department sends notice to 100 Indians HNIs. Undisclosed Dubai properties

What happens next?

  • Those who received notices (under Section 143) must now submit proofs, answer detailed questionnaires, and possibly attend hearings.
  • Even if you escape initial scrutiny, reassessment proceedings (under Section 148) can still be launched later — particularly if exempt income crosses ₹50 lakh.

There is no official word on exactly which types of exempt income are targeted.

Wrapping up…

Earlier, the I-T department mostly went after fake claims: farm income, political donations, and rent receipts.

But now the game has changed.

The intent may be to curb tax evasion, but the execution risks throwing legitimate cases into the same basket as fraudsters.

For Big 4 partners and senior professionals, this means long months of paperwork and stress — despite staying within the law.

TheFinanceStory

TheFinanceStory

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