ITR Filing: Thinking of submitting fake rent receipts in income ta? Here's how I-T Department can catch you
Income Tax Season: Saving tax through House Rent Allowance (HRA) is a time-tested tactic. But some taxpayers take the wrong route by submitting fake rent receipts for tax saving. The Income Tax Department (I-T) can outsmart such people easily. With the last date to file ITR return today (July 31, 2024), it is important to know how the I-T Department catches violators.
How I-T Department Catches Rent Receipt Frauds: Saving tax is the right of every taxpayer. The old income tax regime and the new income tax regime have various sections that pertain to tax-saving exercises. As long as taxpayers are using the right ways to save tax, it is good for them, but some taxpayers follow ugly ways of producing fake documents to get a tax refund or exemption. They think that they can outsmart the I-T department by doing so. However, in the age of artificial intelligence (AI), the I-T department has various ways through which it can outsmart people using fake documents. With the last date of ITR filing (July 31, 2024) gone, it is important to know how the I-T department catches taxpayers using fake rent receipts.
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I-T Department uses AI to catch people committing fraud
The I-T Department depends on AI to catch fake rent receipts. For that, it matches Form-16 with AIS Form and Form-26AS. It does so since all transactions related to the PAN card are recorded in these forms.
I-T Department uses AI to catch people committing fraud
When a taxpayer claims HRA through a rent receipt(s), the Income Tax Department matches their claim with these forms, and if there is a difference, it is immediately noticed. This automatic process is done through AI.
What are the rules for house rent allowance?
The rule related to HRA says that one can claim an HRA deduction only if they are getting an HRA allowance from the company. On the other hand, if the employee pays rent of more than Rs 1 lakh a year, they also have to provide the PAN number of their landlord.
What are the rules for house rent allowance?
If your company gives HRA and you are claiming annual rent of less than Rs 1 lakh, you will not have to provide the PAN of your landlord. In such a situation, you can claim HRA up to Rs 1 lakh, which will not be checked by the Income Tax Department to see if it is correct or fake.
What are the rules for house rent allowance?
With this, the Income Tax Department matches the amount claimed under your HRA with the amount sent to your landlord's PAN number. Please note that all transactions related to PAN are written in the AIS form. If a difference is found between the two, then a notice is sent to you by the Income Tax Department.
Why does fraud happen in HRA?
The biggest reason for fraud regarding HRA is that it saves tax on a lot of income.
Why does fraud happen in HRA?
Suppose you show the rent of your house as Rs 25,000 per month, i.e., Rs 3 lakh annually, you will not be taxed on this amount.
Why does fraud happen in HRA?
In such a situation, many people think that they can save tax by producing fake rent receipts, but now the I-T Department is catching these frauds and sending notices.