New Delhi: Salaried employees submit rent receipts to avail tax benefits under House Rent Allowance (HRA). However, several people submit fake rent receipts to save taxes. Experts are of the opinion that if the Income Tax (IT) department officials catch a taxpayer committing such a wrong act, the individual may have to pay 200 per cent more tax than the amount wrongly reported under Section 10(13A) of the Income Tax Act.
How is HRA claim verified
The Income Tax department verifies HRA claims through Form 16, PAN records and documents filed by the company where the individual works. A taxpayer should not fake rent receipts or rent agreement as consequences can lead to severe financial losses.
An individual should make sure to submit authentic documents related to HRA or any other tax saving documents. Here are some common mistakes that people should avoid making:
No rent agreement: A taxpayer claiming submitting recent receipts to avail HRA should possess a rent agreement, else it would lead to scrutiny of the tax department.
Fake PAN number: If the annual rent is more than Rs 1 lakh, then the employees are mandated to provide the PAN number of the landlord. If a wrong or fake PAN number is provided, it can be easily caught through the PAN verification system.
Error in Form 16: The company provides information related to HRA in Form 16. If someone has claimed HRA but it is not mentioned in Form 16, then the tax department may consider it an error.
Paying rent to relatives: Paying rent to parents or relatives is legally valid, but for this, documents like bank transfer and rent agreement are required. If this is not done, then the Income Tax Department can investigate.
How should one react to a notice
If a taxpayer receives a notice related to HRA, then keep these things in mind:
- Submit the correct documents.
- Make sure that the PAN information is correct.
- Respond to the notice on time.
Submitting fake rent receipts to claim House Rent Allowance (HRA) tax benefits carries severe risks. The Income Tax Department verifies HRA claims using Form 16, PAN records, and company documents. False information can lead to a 200% tax penalty under Section 10(13A). Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
