Income Tax Department is stepping up its efforts to address taxpayers – indiansupdate.com

As the deadline for filing Income Tax Returns (ITRs) nears on July 31, 2023, the Income Tax Department is stepping up its efforts to address taxpayers who may be evading taxes by using fake rent receipts. Salaried individuals are being targeted by the tax department for submitting false or inaccurate ITRs, with cases ranging from false rent receipts to fake donations being flagged proactively.

ITR Filing: Claiming Rental Tax Exemptions

Salaried persons can claim tax deductions of up to one lac in rents while giving respective owners’ PAN (under Section 10(13A)). Unfortunately, some individuals are misusing this provision, leading to an increase in cases where taxpayers are receiving notices from the tax department, asking for proof to validate their tax exemptions, according to Abhishek Soni, CEO and Co-founder of Tax2win.

To verify the authenticity of such claims, the Income Tax Department is taking a comprehensive approach. They are profiling individuals from all angles by analyzing data from ITRs and cross-referencing it with information from external sources, including verification from taxpayers themselves, as per Soni. If discrepancies are identified, the tax department may issue notices to these taxpayers. In cases of under-reported income, the department holds the authority to impose a penalty of up to 200% of the tax applicable on the misreported income.

To avoid getting into trouble, it is essential to ensure honest tax compliance. Some practical tips for individuals include using a valid rental agreement, preferably opting for online or cheque rent payments, mentioning the landlord’s PAN for payments exceeding ₹1 lakh, maintaining records of utility bill payments, and obtaining a PAN declaration from the landlord if it is not available.