Forged rent receipts from parents and relatives have been a very common easy concept to reduce the burden of tax, since a long time now. This dismissive ignorance towards the taxation policies was neglected by the taxmen and also the employers, as they considered it a minor offence. But now, it will not be the case.
The income tax department has now taken it upon themselves to ask for proper proof from the person who wants to avail the rebate on tax on home rent. The proof should clearly show that the taxpayer is an authentic tenant who actually lives in the property concerned.
Earlier, salaried employees who received ‘house rent allowance’ were able to dodge paying tax on 60% of the amount through showing forged rent receipts.
But now, the officer concerned can officially ask the taxpayer to show a proof (for example, license agreement, electricity bill etc.) if his income is being lowered on account of house rent. This step is bound is bound to make people follow the rules and regulation. They will not get indulged in forging rent receipts under income tax.
If the taxpayer is forging rent receipts under income tax then the documents which are needed for proof will not be available to him. He may not be actually paying the rent from his pocket as he may be staying with his parents or in his ancestral home. Another case is when the person is actually an authentic tenant but he may increase the amount of rent paid in the fake receipt. This will not create an issue until the landlord receiving the rent doesn’t come under the tax net.
It still remains uncertain whether the tax officials will actually make the efforts required to interrogate the salaried employees because the concept of paying tax on home rent on only a slight portion of HRA is very common.
But, Income Tax Appellate Tribunal has made it easier for the officials by introducing technological measures for strict reporting systems.