Most common mistakes done by salaried taxpayers and it is advisable to consider those in order to avoid any kind of delay and mismatch.
Bogus Bills For HRA Claims
It is the practice of employees to submit fake bills for HRA Claims without a relevant document in support. They just mention about lease agreement and rent outflow, but actually, there is no such kind of transaction from their account. These sorts of actions are punishable under Income-Tax Act.
Tax Escape On Interest From Bank Accounts
The amount of tax mismatch can directly be gauged from the person’s account and Form 26AS. Head of Tax Research, H&R Block India says, “Non-reporting / under-reporting of these amounts are apparent cases of tax evasion and calls for further investigation. Further, at times taxes are also deducted from interest income and hence, the mismatch of income by non-reporting are easily identified.”
Show Income From All Employers
The Tax Department has details about the income of all employers, so whether you switch jobs or earn part-time from two or more employers, you are required to pay the tax accordingly. The tax department has information regarding these based on the TDS return filed and any mismatch can lead to an inquiry against you.
Misuse Of Chapter VI-A Deductions
Some professionals make the taxpayers save high taxes and in return charge 10-25% of the refund amount. These professionals generally make false claims such as Education loan interest – u/s 80E, Tax Saving Investment u/s 80C, Deduction form Mediclaim policies – u/s 80D, Donations – u/s 80G, 80GGA, 80GGC, medical treatment of certain illnesses – u/s 80DD, 80DDB, 80U, and deductions relating to disability. But with the attachment of Aadhar and PAN now, the tax department can track the truth.
Chandak says, “In case of any discrepancy it can start an investigation against the taxpayer. Recently the Tax Department has notified Centralised Communication Scheme, 2018 as per which Centralised Communication Centre shall issue a notice to any person requiring him to furnish information or documents for the purpose of verification of information in his possession. Based on this inquiry conducted, the Centralised Communication Centre may forward the outcome of such inquiry to the Assessing Officer for further action and if the AO is convinced that you have made a false claim, then you may have to face penalties and prosecution under the I-T Act.”
Misuse of 80C Form
The salaried taxpayers claim fake 80C deductions such as Mediclaim deductions and LIC bills, in this way they escalate the fixed deposits without real outflow. Chandna says, “As payments made to this under this investment schemes are directly mapped to employees Form 26AS which are available with the tax department, such manipulations are evident and subject to severe prosecutions as employees are time and again indulging in such frauds despite endless reiterations.”
Fake Claim Under Section 10
Many salaried taxpayers make fake claims under Section 10 regarding LTA, HRA, and medical reimbursement. Now, the tax department match Form 16A, Form 26AS, and Form 16 to compare with the report.
Wrong Claims On Capital Gains
Taxpayers make wrong claims using u/s 54, 54F, 54EC on capital gains in order to save tax. Now, the ITR asks for the details of the investment as well to check the truthiness. Chandak informs, “Further with the linkage of Aadhaar and PAN with property transactions and the financial account, it would be easy for the tax department to verify your claims electronically and if those are found incorrect, it can result in severe action against you.”
Escalating Home Loan Interest
For the people, who are planning to escalate home loan interest in order to fool the government, it is advisable not to do this as your claims can be rejected in case of an insufficient document and strict action could be taken against you.