Want to Save Tax? Fake Rent Receipts Won't Help Anymore
People using fake rent receipts to save on income tax may be in for some trouble now.
Tax payers filling up forms (REUTERS)
New Delhi: People using fake rent receipts to save on income tax may be in for some trouble now.
A report in the Economic Times says those submitting forged receipts need to be more careful now as income tax officials can ask them to show more proof that they are genuine tenants
The report quoted Dilip Lakhani, senior tax advisor, Deloitte Haskins & Sells LLP as saying that the ITAT (Income Tax Appellate Tribunal) ruling has now laid down the criteria for the assessing officer to consider the claim of a salaried employee and if necessary question its justification. This will put the onus on the salaried class to follow the rules in availing the tax rebate.
Till now, to avail of the benefit, the PAN of the owner of the residence was one needed in case the rent is above Rs 1 lakh per annum. But now the official can ask for proof even if it is below Rs 1 lakh.
The assessing officer can now demand proof, such as leave and licence agreement, letter to the housing co-operative society informing about the tenancy, electricity bill or water bill if he suspects the rent receipts are fake, according to a recent tribunal ruling.
As of now, a salaried employee receiving 'house rent allowance' from the employer could escape paying tax on at least 60% of this amount by generating a fake rent receipt.
This tribunal ruling comes a few months after the government's decision to cap the loss on property bought with borrowed money.
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