HRA Fraud Alert: I-T Department catches taxpayers misusing PAN cards to claim HRA

The Income Tax Department has started cracking down on those misusing HRA i.e. House Rent Allowance by giving fake documents. The Income Tax Department has found out in its investigation that many people have misused PAN cards of other persons. As per income tax rules, while claiming HRA of more than Rs 1 lakh, you are required to provide the PAN card of the landlord. In its investigation, the I-T Department found that some people have submitted PAN cards of those who are not their landlords. Such cases have also come to light in which people have entered some PAN numbers which are not valid.

As per some media reports, as many as 8,000-10,000 cases of PAN card misuses have been reported.

Such high numbers of PAN card misuses raised the I-T Department's eyebrows as it is now investigating in depth to know the real magnitude of the fraud.

The I-T Department is all set to send notices to those against whom irregularities are found.

How did I-T Department know about this fraud?

I-T Department officials were shocked when they found out that some taxpayers had submitted rent receipts worth Rs 1 crore.

When probed, such receipts were found to be fake.

When the person whose PAN had shown 'rental income' was interrogated, it was found that the information was incorrect.

The investigation also revealed that the person did not get as much rent as was shown in his name.

After the matter came to light, the I-T Department did an in-depth investigation and many such cases were exposed.

According to I-T officials, the entire fault here lies with employees and not with employers.

Even if several employees have used the PAN card of the same person, it will not be the fault of the employer but of the employee.

This is because the employer cannot thoroughly examine the documents given by every employee.

However, employers can be cautious to some extent while giving HRA exemption.

Some companies have such a policy that if an employee makes a fake HRA or LTA claim, then strict action can be taken against him.

How is the I-T Department catching fraud?

Nowadays, most of the financial transactions are linked to the PAN card.

The I-T Department can easily identify fake claims through the latest technology and the automated process.

When the catch culprits, they impose penalties on them.