Companies ask for investment proof from their employees. Let us tell you that on the basis of these proofs it is decided how much tax (Income Tax) will be deducted from your salary. Although some tax deductions start taking place in the beginning itself on the basis of investment declaration, but the final deduction takes place after the investment proof is given. While giving investment proof, some people often submit fake rent agreement and rent receipt to save more tax. If you are also thinking of doing something like this then just wait.
For some years, many people have been saving taxes in this way. The Income Tax Department is also seeing all this and has now started cracking down on such people. The Income Tax Department has started sending notices (IT Notices) to those who claim tax deduction by submitting fake rent receipts since last year. Now the question arises that how is this happening? Let us know how the Income Tax Department catches ITRs containing fake rent receipts.
In the era of Artificial Intelligence, the Income Tax Department is also using AI to detect fake rent receipts. For this, AIS Form and Form-26AS are matched with Form-16.
Let us tell you that all the transactions related to PAN card are recorded in these forms. When a taxpayer claims House Rent Allowance through rent receipt, the Income Tax Department matches his claim with these forms and any difference is immediately visible.
There is a rule related to House Rent Allowance that one can claim a deduction of HRA only if one is getting HRA from the company. If the employee pays more than Rs 1 lakh as rent annually, he will also have to provide the PAN number of his landlord.
With this, the Income Tax Department matches the amount claimed under your HRA with the amount sent to your landlord's PAN number. Let us tell you that all transactions related to PAN are written in AIS form. If a difference is found between the two, a notice is sent to you from the Income Tax Department.
If your company gives HRA and you are claiming annual rent of less than Rs 1 lakh, then you will not have to provide the PAN of your landlord. That is, in this situation you can claim HRA up to Rs 1 lakh, which will not be checked by the Income Tax Department whether it is true or fake.
Whenever it comes to avoiding the Income Tax Department, the first thought that comes to mind is to do transactions in cash. Let us assume that you have replied to the notice of the Income Tax Department by saying that the difference between the rent receipt and the landlord's PAN transaction is because you paid the rent in cash or some part of it in cash.
In such a situation, the Income Tax Department can also send a notice to the landlord asking for his reply and it is possible that his tax liability may increase if he tells the truth. In such a situation, you may also be accused of fraud. It is better to avoid fake rent receipts.
The biggest reason for fraud regarding HRA is that a lot of tax can be saved through it. Suppose you have shown the rent of your house for Rs 20 thousand per month i.e. Rs 2.40 lakh per year, then you will not be directly taxed on this amount, provided that you are getting HRA of at least Rs 2.40 lakh from the company.
However, if you have paid less rent then you do not get a claim on this entire amount. In such a situation, many people think that they can save tax by making fake rent receipts, but now the Income Tax Department is catching these frauds and sending notices.
