Do you think of submitting fake rent receipts in income tax return? Here's how I-T Department can catch you on wrong foot
Income Tax Return Filing: House Rent Allowance (HRA) is a key component in the salary of an employee taxpayer. It can help them save considerable tax. But sometimes, such taxpayers get greedy and use wrong methods to cheat the Income Tax Department (I-T Department). But the I-T Department has its own ways to catch such violators.
Income Tax Return Filing: How I-T Department Catches Rent Receipt Frauds: Taxpayers in the old and new tax regimes get several options to save income tax. Specially in the old tax regime, House Rent Allowance (HRA) is a key component that can help a taxpayer save substantial tax. To claim tax benefits, a taxpayer needs to produce rent receipts. Among taxpayers, it's a common practice to save tax through rent receipts. But sometimes they get greedy and produce fake rent receipts. They think they can outsmart the Income Tax Department (I-T Department). But that is where things can get ugly for violator taxpayers. In the era of high-tech, the I-T Department can outsmart such rule breakers. Here is what it can do-
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I-T Department uses AI to catch taxpayers producing fake rent receipts
Artificial intelligence is taking the world by storm, and the I-T Department is not averse to using it to catch violators who want to cheat it through fake rent receipts.
I-T Department uses AI to catch taxpayers producing fake rent receipts
To catch them on the wrong foot, the I-T Department matches Form-16 with AIS Form and Form-26AS. These forms comprise all transactions related to the PAN card, providing a great helping hand for the I-T Department.
I-T Department uses AI to catch taxpayers producing fake rent receipts
When a taxpayer claims HRA through a rent receipt(s), the I-T Department matches their claim with these two forms. If it finds any discrepancy in the receipts, it singles it out. AI is used in the entire process.
What are the rules for house rent allowance?
As per HRA rules, a taxpayer can claim deduction only if they are getting an HRA allowance from the company. If the taxpayer is paying rent of more than Rs 1 lakh in a financial year, they need to provide the PAN number of their landlord to the I-T Department.
What are the rules for house rent allowance?
But if a company provides HRA to an employer and they pay less than Rs 1 lakh rent in a financial year, they don't need to provide the landlord's PAN card to the employer.
What are the rules for house rent allowance?
The I-T Department will not crosscheck rent receipts in such a case. However, if there are discrepancies in HRA claim, the I-T Department will send the notice to violators. It may also penalise the offender.
Why does fraud happen in HRA?
The simple reason is that taxpayers want to save money through it. They think that by fooling the I-T Department, they can save a substantial amount that they can use for other purposes.
Why does fraud happen in HRA?
But in the era of AI, the I-T Department is smart enough to catch offenders.