You Can’t Submit Fake Rent Receipts To Reduce Your Tax Burden Anymore. Here’s Why.

It’s common practice in India to produce fake rent receipts to show the taxman so as to reduce the tax burden a little. It’s been going on for ages and is pretty much an open secret. If you live in your father’s house without paying any rent as such, you could still produce a rent receipt signed by your father and reduce your overall tax burden. However, all that stops now.

According to a recent tribunal ruling, the Income Tax Department can now demand proof like a tenancy agreement, notice to society etc. whenever you submit a rent receipt. 

For those of you submitting a genuine rent receipt, procuring these proofs shouldn’t be an issue. However, if you’re submitting a fake rent receipt, well then, you have a problem.

 

The tax assessing officer could even go back and cross check your rent receipt address with your Income Tax Returns (ITR) to verify your claims. 

Just saying, be careful going forward.

 

Dilip Lakhani, senior tax advisor, Deloitte Haskins & Sells LLP., had this to say about the ruling.

 

So basically, if you’ve been submitting fake tax receipts to reduce your taxable income, you’ll be asked to produce many more supporting documents. It may still be an option for some but the effort is certainly going to be greater than you’re used to.

News Source: The Economic Times