The liberation affairs ministry has suspended allowances of about one hundred freedom fighters.
The allowances will remain suspended from two to 12 months.
The ministry said there are allegations that they have given false testimony taking financial benefits from various persons.
Meanwhile, the ministry has sent letters to upazila nirbahi officers (UNOs) to make the decision effective.
The certificates of those freedom fighters may also be cancelled if the honour of other freedom fighters are tarnished, officials said adding criminal cases may also be filed against them.
Liberation affairs minister AKM Mozammel Haque said, "It is true many freedom fighters are giving false testimony against genuine freedom fighters. As a result, the honour of real freedom fighters is being tarnished."
"We are taking punitive action. The certificates of freedom fighters will be cancelled if they give false testimony," the minister added.
Sources said the freedom fighters whose allowance has been suspended will file appeal.
Sources said allowances of Gopalganj's Rahman Sharif and Madaripur's Fazlul Haque have been suspended for the three months on charges of giving false testimony in favour of late Arab Ali.
The elder son of Arab Ali filed a writ to enlist the name of his father in the list of freedom fighters.
The National Freedom Fighter Council (Jatiya Muktijoddha Council) conducted an investigation settle the matter.
During the investigation, Gopalganj's Rahman Sharif and Madaripur's Fazlul Haque gave false statements, and said Arab Ali was their co-freedom fighter. As a result, their allowances have been suspended.
Speaking to Prothom Alo, Rahman Sharif said, "Fazlul Haque's allowances and mine have been cancelled as our statements did not match. In fact Arab Ali fought in the Hemayet force. Fazlul Haque said Arab Ali fought with the Khalil force."
When asked why did you give a statement, Rahman Sharif said, "Arab Ali's son and daughter-in- law cried and took me. I didn't tell lies."
Jatiya Muktijoddha Council director general Johurul Islam said, "It is unfortunate that many come to give statements in exchange of money. There is no option but legal action if anyone commits this crime for the second time."
*This report, originally published in Prothom Alo print edition, has been rewritten in English by Rabiul Islam.