ITR Filing: Income Tax Department Could Impose Penalties of Up to 200% of Your Actual Tax Payment

As the deadline for filing Income Tax Returns (ITRs) approaches on July 31, 2023, the Income Tax Department is stepping up its efforts to address potential tax evasion by taxpayers using fake rent receipts. 

Salaried individuals have been under scrutiny for submitting false or incorrect ITRs. The tax department is actively identifying and flagging such returns that involve fake rent receipts or false donation claims.

Salaried individuals have been permitted to claim tax exemptions for rent up to Rs. 1 lakh without disclosing the PAN of their landlords under Section 10(13A).

However, some individuals have been misusing this provision, leading to an increase in cases where taxpayers are receiving notices from the tax department, requiring proof to validate their tax exemptions.

The Income Tax Department is adopting a detailed method & approach to make sure the authenticity of such claims. The tax department is conducting a comprehensive 360-degree profiling of individuals by analyzing data from their ITRs and cross-referencing it with information obtained from external sources. This includes verifying the information provided by the taxpayers themselves.

In case of discrepancies, the tax department can send notices to the taxpayers. If they find that the income has been under-reported, the department has the power to levy a penalty of up to 200% of the tax applicable on the misreported income.

To avoid trouble, taxpayers should ensure honest tax compliance by following these guidelines:

• Use a valid rental agreement.
• Prefer online or cheque rent payments.
• Mention the landlord's PAN for payments exceeding Rs. 1 lakh.
• Keep records of utility bill payments.
• Get a PAN declaration from the landlord (If not available).

1.5 Crores ITRs Are Processed of 3 Crores Filed Returns By Income Tax Department

As of July 18, 2023, India's income tax department has received and processed over three crore income tax returns (ITRs) for the fiscal year 2022-23. An impressive 91% of these ITRs were filed electronically. Among them, more than 1.5 crore ITRs were successfully processed after being e-verified. 

Notably, this significant achievement was reached seven days ahead of the previous year's timeline, as announced by the department on Twitter.

As of Wednesday, the income tax department has received and processed over 3 crore income tax returns (ITRs) for the fiscal year 2022-23. Among these, an impressive 91% have been electronically verified. 

Out of the 3.06 crore ITRs filed until July 18, 2023, more than 2.81 crore ITRs have undergone e-verification, representing more than 91% of the total filings. Furthermore, out of the e-verified ITRs, more than 1.50 crore have already been successfully processed.

It's worth noting that this year, the milestone of 3 crore ITR filings has been achieved seven days earlier than in previous years, as highlighted in the tweet from the income tax department.

 

Also Read: ITR Filing Deadline: What Happens When Taxpayers Don't File Income Tax Returns on Time? Importance to File Your ITR On Time: Benefits & Drawbacks

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