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Business News/ Money / Personal Finance/  ITR filing: Income tax department may impose penalty of up to 200% of your actual tax outgo. Check details
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ITR filing: Income tax department may impose penalty of up to 200% of your actual tax outgo. Check details

Income Tax Department intensifies efforts to tackle taxpayers using fake rent receipts to evade taxes. Notices are issued to individuals for proof of tax exemptions. Scrutiny and penalties for under-reporting income. Tips for honest tax compliance provided

ITR filing: If discrepancies are detected, the tax department may issue notices to these taxpayers.Premium
ITR filing: If discrepancies are detected, the tax department may issue notices to these taxpayers.

ITR filing: As the deadline for filing Income Tax Returns (ITRs) approaches on July 31, 2023, the Income Tax Department is intensifying its efforts to tackle taxpayers who may be using fake rent receipts to evade taxes. The income tax department has been cracking down on salaried individuals for submitting false or incorrect income tax returns (ITRs). From submitting fake rent receipts to false donations, the tax department is proactively flagging such returns.

Also Read | ITR Filing Due Date Extension: Is the govt looking to extend the deadline to aid flood-affected areas?

ITR Filing: Tax exemptions for rent

Salaried individuals have been allowed to claim tax exemptions for rent up to 1 lakh without disclosing the PAN of their landlords (as per Section 10(13A)). 

“Unfortunately, some individuals have been taking advantage of this provision, leading to a surge in cases where taxpayers are receiving notices from the tax department, asking for proof to validate their tax exemptions," said Abhishek Soni, CEO and Co-founder Tax2win. 

To scrutinize the genuineness of such claims, the Income Tax Department is adopting a comprehensive approach. “They are conducting a 360-degree profiling of individuals by analyzing data from ITRs and cross-referencing it with information obtained from external sources, including verifications from taxpayers themselves," said Soni

If discrepancies are detected, the tax department may issue notices to these taxpayers. If it is found that income has been under-reported, the department has the authority to impose a penalty of up to 200% of the tax applicable on the misreported income, he added.

1)Let's ensure honest tax compliance to avoid trouble.

2)Use a valid rental agreement.

3)Prefer online or cheque rent payments.

4)Mention the landlord's PAN for payments exceeding 1 lakh.

5)Keep records of utility bill payments.

6)Obtain a PAN declaration from the landlord if not available.

Top reasons for which you could receive an income tax notice

The Income Tax Department issues an income tax notice for a number of reasons under a number of provisions. Normally, a taxpayer receives an income tax notice as a result of missing or filing their income tax return late, filing it incorrectly, claiming an incorrect tax refund, and many other reasons. The income tax notice is issued by the tax department under sections 143(1), 142(1), 139(1), 143(2), u/s 156, Section 245, and Section 148.

Disclaimer: The views and recommendations made above are those of individual analysts, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

 

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ABOUT THE AUTHOR
Sangeeta Ojha
A business media enthusiast. Writes on personal finance, business and banking.
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Published: 27 Jul 2023, 01:11 PM IST
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