Many salaried taxpayers are under the scanner of the income tax (I-T) department for submitting income tax returns (ITRs), complete with bogus rent receipts from close relatives, additional claims against home loans, fake donations, and a number of unethical means of tax evasion encouraged by some of the experts with a promise to cut tax outgo and increase refund, a report has said.
It was relatively easy to dodge tax authorities earlier, while at present many may face hard times because their returns are red-flagged by software used by the revenue department, the Economic Times reported on July 22.
Also Read: The complete Moneycontrol Guide to Income-Tax Filing
Moneycontrol couldn't verify the report independently.
Tax sleuths sent notices to these taxpayers, asking them to provide documentary evidence for claiming tax exemption. These notices are served for exemptions under house rent allowance under section 10 (13A) for salaried individuals; allowance under section 10 (14) for hiring a helper to perform official duties; or deduction under section 24 (b) of the I-T Act for interest paid on home loans, the report mentioned citing anonymous sources.
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For salaried individuals earning more than Rs 50 lakh, reassessment can be done within a decade. On the other hand, for individuals earning below Rs 50 lakh, the reassessment can be carried out for eight years.
Plus, computerisation of records helps the I-T department match the data mentioned by political parties or charitable trusts in their tax returns with donation details mentioned by individuals.
Tracing the source
Rahul Garg, managing partner at Asire Consulting, a tax and regulatory consultancy firm, told the financial daily the tax authorities are doing a comprehensive profiling of individuals based on ITR data together with information collated from external sources, including verifications from filers, to scrutinise the authenticity of claims.
Also Read: Using AI, Income-Tax department sends notices to tax evaders for fake donations
The I-T department has asked the taxpayers to disclose the name, address, and contact numbers of the chartered accountant, advocate, or I-T professional who prepared and filed the ITRs.
“This is the use of technology in the right direction to trace tax evasion … many individuals in smaller tax brackets think, who would look at smaller value cases? Accordingly, they end up making deduction claims without having made actual payments,” the daily quoted Siddharth Banwat, partner with a large CA firm, as saying.
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