Income tax returns: Just keep it real2 min read . Updated: 24 Apr 2018, 07:29 PM IST
While filing your income tax returns, report your income correctly as submission of inflated or fake bills to save tax could even land you in jail
Have you declared lower income to save tax while filing your income tax returns (ITR) in the past? Well, this year, you should be extremely cautious while filing your returns.
At the beginning of the tax filing season, the income tax (I-T) department has issued a cautionary note to all salaried individuals who are eligible for ITR filing.
The move comes immediately after the tax department issued revised ITR form where you now have to declare the break-up of your salary. Here is what you should know:
Don’t inflate your bills or under-report income
I-T department has said that taxpayers should report correct income in their ITR. It stated, “The department has noted with concern the attempt salaried taxpayers make to under-report income or inflate deductions aided and abetted by unscrupulous intermediaries. Such offences are punishable under various penal and prosecution provisions of the Income Tax Act."
The IT department has also warned that it may prosecute the intermediaries and abettors under relevant sections of the I-T Act and may refer such cases to other law enforcement agencies for appropriate action.
Your chartered accountant will also come under IT scrutiny, in case of any malpractice. Earlier, tax advisories were not under the ambit of this rule. But from this year, advisories and chartered accountants who are party to the malpractice would also face same penalty. In some cases, submission of inflated or fake bills could land you in jail.
How will they catch you?
In case of a high-risk individual, the authorities will examine and verify the details submitted in the ITR. The IT department may ask you to submit proofs if they find discrepancy. “The CPC has mentioned that proofs may be asked for and reviewed even after processing of tax returns, and refunds may be delayed. Taxpayers must exercise extreme caution," said Archit Gupta, founder and CEO, ClearTax.
What should you do?
There are a number of legitimate ways to save tax. To begin with, if you have invested in public provident fund, equity linked savings scheme, paid insurance premium or tuition fee, you can declare it and save tax on up to Rs1.5 lakh under section 80C of the I-T Act.
Donations for charity are also exempt from tax under section 80G. For these claims, you have to submit original receipts and correctly quote the PAN of the person receiving the funds. Do keep the documents handy so in case your ITR comes under scrutiny, you should be able to produce them.
Also remember as you have to provide a break-up of your salary in ITR1, the tax authorities will now be able to cross-check the details easily. Hence, fill your ITR form carefully too.