Taxpayers: Big Update: Giving fake rent receipt in ITR filing will lead to serious loss, 200% tax penalty or jail
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With the deadline for filing Income Tax Return (ITR) ending on July 31, 2023, the tax department is taking steps to deal with taxpayers allegedly using fake rent receipts to evade tax.
Experts say that if mistakes are found, the department has the right to impose a fine of up to 200 per cent of the applicable tax on the misreported income. The Income Tax Act gives certain tax exemptions and deductions in respect of House Rent Allowance (HRA) and donations. To claim such exemption from HRA, taxpayers sometimes resort to fake rent receipts. After which valid documents, proof of rent payment or proof of donation can be sought in the notice if rent receipt or donation is wrongly deducted.
In these situations, it is considered misreporting of income.
Misrepresentation or suppression of facts, claim of expenditure not supported by documentary evidence, or posting of any false entry in the books of account amounts to misreporting of income, and hence 200 per cent of tax on such underreporting A fine of an amount equal to Rs. Rupee. “The income is chargeable to tax under section 270A,” Diwakar Vijayasarathy, founder and CEO of DVS Advisors, said in a statement to sister channel CNBC TV.
what the experts say
Besides, rejection of fake rent receipts can lead to re-computation of income by the tax authority, said Yeshua Sehgal, head of tax markets at tax and consulting firm AKM Global. Sehgal told CNBC-TV, “It should be noted that there is a provision of jail term for dealing with such cases.” Also, books of account on the basis of forged or false documents or any false documentary evidence Any entry in is treated as a wrong entry. If caught in the act, he can be fined Rs 10,000 or charged with tax evasion under section 271AAD.
This action is taken when professionals provide false information
Further, where any professional, i.e. accountant or merchant banker submits a report or certificate based on false information, the AO or CIT(A) shall direct such professional to pay a sum of Rs.10,000 for each such report .
(pc rights of employees)
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