Income tax refund: Using fictitious rent receipts while filing an ITR might result in serious penalties

 Income tax refund: Using fictitious rent receipts while filing an ITR might result in serious penalties

ITR Penalties: Wrong deduction claims result in incorrect income reporting, say tax specialists. According to the Income Tax Act of 1961, seeking a deduction or HRA exemption based on fictitious rent receipts is regarded to be misreporting.

Income Tax Department: If you filed an ITR (ITR) until July 31st, you must read this announcement. Tax professionals constantly encourage you to use caution while claiming tax exemptions and deductions when completing income tax returns. When processing ITRs submitted for the current year, the Income Tax Department may require you to provide documentation of any claimed deductions and exclusions.

No cause for concern

You won't need to be concerned about any allegations if you can provide the department with the relevant evidence. However, the claimed deduction and tax exemption will be deemed as uncertified if a person is unable to produce proof or the Income Tax Department is dissatisfied with the proof you gave. Additionally, the Income Tax Department may penalise you in such circumstances.

The salary clause was consulted for evidence

Tax specialists believe that incorrect deduction claims result in inaccurate income reporting. Misreporting of income is defined as seeking an exemption from HRA in excess based on fictitious rent payments or claiming a deduction based on misleading documentation. according to the 1961 Income Tax Act based.

It was recently reported that the Income Tax Department has requested verification of the deductions claimed for the ITR submitted for the financial year 2021–2022 by issuing letters to the members of the salaried class. The Income Tax Department can locate these instances.

The Income Tax Department has discovered that people are using fictitious exclusions and deductions to claim tax refunds while filing ITRs, according to chartered accountant Ashish Mishra. The Income Tax Department is able to locate such imposters. For instance, if rent was paid to parents in order to qualify for an HRA deduction. Additionally, the Income Tax Department can locate such situations if the parents neglect to record this rental income in ITR.

The Income Tax Department may levy a fine and a penalty for providing false information regarding income if the taxpayer is unable to furnish the requested papers. A penalty equal to 200% of the tax due on such misreported income will be assessed under Section 270A of the Income Tax Act. Let us inform you that the fine may also include the amount of interest. It is crucial that you only include information for which you have solid supporting documentation when preparing your income tax return.