New Delhi: The income tax department (IT) is on alert for individuals filing income tax returns with completely bogus rent receipts from their relatives, unnecessary add-on claims of home loans and even presenting fake donation slips. The IT department is also scrutinising the unethical methods for avoiding tax used by the individuals, often suggested by some of the experts in order to increase refunds, a report stated.

According to the Economic Times report, in the past it was relatively easy to duck tax authorities, however, at present, many may face hard times because their returns are red-flagged by the software used by the revenue department

Under the IT department scanner

Taxpayers are receiving notices from the IT department, ordering them to provide documentary evidence for asserting tax exemptions. The sent notices are regarding exemptions under house rent allowance under section 10 (13A) for employed persons and allowance under section 10 (14) for recruiting helpers to perform official duties or deduction under section 24 (b) of the IT Act for interest paid on home loans, the report cited anonymous sources.

The Central Board of Direct Taxes keeps a proper check on its records by maintaining computerised records to match the data mentioned by political parties or charitable trusts in the tax returns along with the donation details given by the individuals.

Origin Tracking

Rahul Garg who is a managing partner at Aspire Consulting, a tax and regulatory consultancy firm, told a financial magazine that the tax authorities of India are conducting extensive studies of taxpayers.

The study is based on ITR data with information collated from outside sources, in addition to the verifications from filers in order to inspect the authenticity of claims.

Furthermore, the IT department is demanding that taxpayers in India disclose the name, address and contact numbers of the chartered accountant, advocate or IT professional who would have prepared and filed their respective ITRs.