Income Tax: Tightening the noose on those taking benefits of HRA illegally

income tax: If you are claiming HRA and are availing exemption in the name of house rent while paying income tax, then file the return carefully. The Income Tax Department is also investigating this thoroughly. According to a report, the Income Tax Department has detected fraud related to use of invalid PAN cards by individuals claiming HRA. It is being told that the claims were submitted by people who were not tenants. So far, it has come to light about eight to 10 thousand people who had submitted claims for an amount of Rs 10 lakh or more. The first case came to light when officials found a purported receipt of Rs 1 crore given by a person. When Income Tax officials started investigation, it was found that some officials of a company had claimed to be on rent using the same PAN. Investigation revealed that he was not actually paying rent to the landlord.

What do income tax officers say

Income tax officials said that the department is keeping an eye on such employees who have claimed tax exemption by giving illegal or wrong information. However, it is not clear what legal action will be taken against him. He said that this is another serious case of misuse of PAN card. At present, TDS is levied on landlord’s annual rental income of up to Rs 50,000 or annual income of more than Rs 6 lakh. In such a situation, it is easily used by the employees for tax rebate. However, in this case it is entirely the fault of the person taking tax exemption. The person giving the PAN card cannot be held guilty in this.

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What do experts say

Kuldeep Kumar, partner of Mainstay Tax Advisors, said that PAN card is linked to any financial transaction of more than Rs 50 thousand. In such a situation, with the use of new technology, automatic processes and data analytics, it is not very difficult for the Income Tax Department to detect any kind of tax evasion. In such a situation, those who evade tax may have to pay tax, interest on tax, surcharge in some cases, fine and in some cases even go through the legal process. If in any case the parents have to pay the rent then it is better to give them the money through check or electronic means. Also, the parents of the person availing tax exemption will have to give information about rental income.