A good friend (who prefers anonymity) was reviewing his AIS (annual revenue assertion) earlier than submitting ITR to make sure there isn’t a disparity between the 2. He was shocked to see that rental revenue reported in AIS was twice what he was truly receiving! The tenant was solely paying him Rs. X per 12 months as lease however was claiming Rs. 2X as lease for HRA utilizing the good friend’s (the owner’s) PAN card!
If this incorrect entry had been left uncorrected, the owner could be responsible for investigation by the revenue tax (IT) dept. They could ship him a discover to revise the return with Rs. 2X as rental revenue!
From this evaluation 12 months onwards, the IT division has made obtainable an annual revenue assertion for all particular person taxpayers. This beautiful a lot contains (or will embody within the coming years) each digital transaction related to us.
For instance, SB account curiosity, dividends obtained, inventory and mutual fund transactions, and so forth. A landlord’s rental revenue can be included if the tenant has claimed HRA utilizing the owner’s PAN quantity.
My good friend summarised his expertise as follows:
Final Saturday, all ITR particulars had been up to date. I solely needed to submit. I simply thought would validate the numbers towards AIS; it’s when this cockroach surfaced. (So one key message you may say is that individuals confirm AIS earlier than submitting ITR)
– Then I couldn’t submit and was massively upset with the man, having practically twenty years of a superb relationship (The following message is that tenants will lose face to their proprietor, and extra if the proprietor is thought to our Father, in-law, and so forth.)
– The third lesson is that each one RENT transactions must be credited to the financial institution (no money) and yearly renew the settlement copy.
I mentioned this with a number of mates when extra humorous issues surfaced.
– Husband pays 15K lease, however HRA each the Husband and Spouse claimed 15K every!
– In one other case, the ex-tenant and current tenant each had been overstating. The current tenant overstated lease by 25%, and the ex-tenant overstated by 50% with out staying within the property. The ex-tenant modified his cell quantity, which the proprietor couldn’t hint.
– Home was let for Lease, however the tenant has claimed HRA beneath proprietor PAN!
AIS can put an finish to such faux HRA claims if the landlords are vigilant.
So what ought to my good friend do?
- Right the error within the AIS by submitting “suggestions” on the revenue tax e-portal by deciding on the “Info is just not absolutely right” possibility.
- File returns by displaying Rs. X because the rental revenue (that is the precise lease obtained as per the rental settlement)
- Hold information of rental revenue obtained prepared in case there’s a discover issued by the IT dept. This may simply be cleared up on our personal or with the assistance of a CA.
The massive query on our minds is, “will the IT dept. Scrutinize the tenant and make him pay the tax defrauded with the bogus HRA declare with curiosity?” Tax specialists are higher positioned to reply this. A simple guess is that the IT division is more likely to search a proof from the tenant and supply him an opportunity to supply documentation to assist his declare. If he’s unable to take action, a tax demand with a high-quality will ensue. When this can occur is unknown.
If there’s a single takeaway from this, the taxman is watching! Any try and evade tax or cut back tax by bogus means (at the least with conditions related to an digital path) can simply be discovered by way of the AIS. Tax evasion could be fairly costly. Honesty is the “low-cost and greatest” coverage!
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