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HRA fraud: Income tax department finds HRA fraud with use of illegal PAN

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ITR Filing: A case of fraud came to light when the Income Tax Department found that the rent receipts worth Rs 1 crore shown by a person were fake. Not only this, the person whose PAN was used denied having any such information.

HRA Fraud: If you also pay income tax every year and also claim HRA, then this news is useful for you. In the last few years, income tax evaders have been on the radar of the Income Tax Department. Now the department has claimed that some people have wrongly claimed tax deduction on House Rent Allowance (HRA). Permanent Account Number (PAN) has been misused by these people. In simple words, these people are taking benefit of rent allowance without paying any kind of rent. 8000-10000 such cases have come to the notice of the department. These people had claimed rent of Rs 10 lakh or more.

Multiple employees used the same PAN

A case of such fraud came to the notice of the Income Tax Department when the department found that the rent receipts worth Rs 1 crore shown by a person were fake. The person on whose PAN ‘rental income’ was shown, during interrogation, denied having any such information. The investigation also revealed that the person did not get as much rent as was shown in his name. After this matter came to light, the Income Tax Department conducted an in-depth investigation. Investigation revealed that some salaried class were misusing PAN to claim tax deduction from the employer. Not only this, such cases have also come to the notice of the authorities, where some company employees have used the same PAN to claim tax deduction.

Wrongly claiming tax deduction

Income tax officials say that the department is investigating those people who have wrongly claimed tax deduction. Such people will be detected and tax will be collected from them. However, it is not yet clear whether the department plans to take legal action against such people or not. This is a matter of misuse related to PAN. In such cases the PAN holder is not aware of this. It is also worth noting that at present TDS is applicable on monthly rent of more than Rs 50,000 or annual payment of more than Rs 6 lakh. In such a situation, many employees use wrong PAN to avoid paying tax on HRA.

Can also be prosecuted with fine

Chartered Accountant Ashish Mishra says that nowadays most of the transactions are linked to PAN. Through technology, automated processes and data analysis, it has become easier for the tax authority to detect fake claims. The person doing this may have to pay penalty and interest along with tax payment. Not only this, in some cases the accused can also be prosecuted. He said that if you pay the rent to your parents, the rent should be paid by check or electronic transfer (not cash) to authenticate the transaction. Also, parents will have to report that rental income in their returns.

Officials associated with the Income Tax Department say that the entire responsibility for committing such fraud lies with the employee. The employer cannot be held responsible for this. Even if many people use the same PAN for rent payment. In such a case, investigation should be done from the employee’s side.

Pravesh Maurya
Pravesh Maurya
Pravesh Maurya, has 5 years of experience in writing Finance Content, Entertainment news, Cricket and more. He has done BA in English. He loves to Play Sports and read books in free time. In case of any complain or feedback, please contact me @ businessleaguein@gmail.com


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