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Discussion > Income Tax > Tax queries >

FAKE RENT RECEIPT

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accounting

[ Scorecard : 140]
Posted On 26 February 2011 at 12:29 Report Abuse

Dear Members,

Employees are tend to produce fake rent receipts. With the increase in Income levels, also corresponding increase in HRA, employees have taken for granted producing fake receipts. It is no astonishing, they sign their own receipts also doubling the actual rent amount.

Technically, the accounts department cannot ensure the authenticity of the rent receipt whether signed by the landlord or its a cooked one. Is thier any rule in the Income tax Act to support, the way that employer can demand the House Rental agreement or PAN of the landlord to prevent this massive evasion of tax. My estimate is that with an size of 100 people working in a Software company, and average salary being Rs.60000/- P.M, the Income tax department is losing revenue in between 7-9 Lakhs which is huge quantum from an single company.

Can someone help trace the rules available in the framework of the INcome tax act, to plug this illegal money.

Thank you,

Vinay

 

 

 

 



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U S Sharma
glidor@gmail.com

[ Scorecard : 19371]
Posted On 26 February 2011 at 12:52

employer can ask for annual certificate for gross salary paid by employee , signed by landlord stating PAN number of landlord for annual report. 





vinay
accounting

[ Scorecard : 140]
Posted On 26 February 2011 at 13:04

Originally posted by : U S Sharma

employer can ask for annual certificate for gross salary paid by employee , signed by landlord stating PAN number of landlord for annual report. 

 Sir, When demanded for Rental agreements or the PAN, the employees put forth thier contention(Just to continue with fake receipts), that there are no such proofs explicitly mentioned in the Income Tax act, for compliance, while the same is questioned by the management too. Is thier any finer niche in the Income tax act, which says that the employer not only collect the receipt but also verify and examine the receipt.




U S Sharma
glidor@gmail.com

[ Scorecard : 19371]
Posted On 26 February 2011 at 13:19

 

85[Furnishing of particulars of income under the head “Salaries”86.

26A.   (1) The assessee may furnish to the person responsible for making the payment referred to in sub-section (1) of section 192, the details of the income under the head “Salaries” due or received by him from the other employer or employers referred to in sub-section (2) of that section and of any tax deducted at source from such income in Form No. 12B.

(2) The person responsible for paying any income chargeable under the head “Salaries” shall furnish to the person to whom such payment is made, a statement giving correct and complete particulars of perquisites or profits in lieu of salary and the value thereof in,—

            (a)   relevant columns provided in Form No. 16, if the amount of salary paid or payable to the employee is not more than one lakh and fifty thousand rupees; or

       87[(b)   Form No. 12BA, if the amount of salary paid or payable to the employee is more than one lakh and fifty thousand rupees, which shall accompany the return of income of the employee.]

Explanation : “Salary” for the purposes of this rule shall have the same meaning as given in rule 3.]

 

source:http://law.incometaxindia.gov.in/DitTaxmann/IncomeTaxActs/2005ITAct/rules026a.htm




U S Sharma
glidor@gmail.com

[ Scorecard : 19371]
Posted On 26 February 2011 at 13:26

http://trak.in/tags/business/2010/06/24/fake-rent-recipts-hra/



sachin sharma
article

[ Scorecard : 117]
Posted On 26 February 2011 at 13:26

as per income tax act there is no provision regarding varification of genuineness of rent receipt produced by the the employee. As per Sec 10(13A) and rule 2A of income tax act rent receipt produced by the employee for claiming deduction of HRA is  satisfactory avidence for the employer and duty of employer over after that.



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U S Sharma
glidor@gmail.com

[ Scorecard : 19371]
Posted On 26 February 2011 at 13:39



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U S Sharma
glidor@gmail.com

[ Scorecard : 19371]
Posted On 26 February 2011 at 14:17

 

(ii) House Rent Allowance: House rent allowance granted to the employee is exempt u/s 10(13A) to the following extent.

Provided expenditure on rent is actually incurred, the amount of exemption granted is the least of:

(1) HRA received;
(2) Rent paid Less 10% of salary;
(3) 40%  of salary  (50%  in  case  of Mumbai,  Chennai, Kolkata   &   Delhi)   salary   means   bonus + Dearness allowance, where provided by terms of employment.

It has to be noted that only the expenditure actually incurred on payment of rent in respect of residential accommodation occupied by the assessee subject to the limits laid down in rule 2A, qualifies for exemption from income-tax. Thus, house rent allowance granted to an employee who is residing in a house/flat owned by him is not exempt from income-tax. The disbursing authorities should satisfy themselves in this regard by insisting on production of evidence of actual payment of rent before excluding the house rent allowance or any portion thereof from the total income of the employee. Though incurring actual expenditure on payment of rent is a prerequisite for claiming deduction under section 10(13A), it has been decided as an administrative measure that salaried employees drawing house rent allowance upto Rs 3000 per month will be exempted from production of rent receipt, it may, however, be noted that this concession is only for the purpose of tax deduction at source, and, in the regular assessment of the employee, the assessing officer will be free to make such enquiry as he deems fit for the purpose of satisfying himself that the employee has incurred actual expenditure on payment of rent



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srinivasan
service

[ Scorecard : 391]
Posted On 27 February 2011 at 17:46

There is no provision under the act seeking the eployer to verify the correctness of the declarations given by the employee. Hoever the TDS circular issued every year one cans cast the responsibility on the employer through the following phrase. 'The disbursing authorities should satisfy themselves in this regard by insisting on production of evidence of actual payment of rent before excluding the house rent allowance or any portion thereof from the total income of the employee". Since the dept. seeks the employer to satisfy himself about the authenticity of the proof of receipts given by the employee, the employer can have a policy in place seeking the employees to give a copy of the rental agreements when the rent exceeds certain level say Rs.10,000/= etc. and also get a declaration from the employees stating that they undertake to prove the correctness of the proof given by them whenever the same is sought. This comes as a protection of the interest of the employer.



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software engg
software engg

[ Scorecard : 23]
Posted On 08 February 2012 at 03:50

 I will tell one situation.

AJAY and VIJAY is earning same income and their HRA is 12000/-.
ajay is staying in costly home, so got much hra exemption.
vijay is sacrifising his comforts and staying in hut.
Dont you feel its injustice to vijay?
Why there is partiality to ajay and vijay when both income is same. and why vijay have to pay more tax to govt.
everyone want to get max exemption so want to spend lavishly like ajay.
Why govt is encouraging people to spend more money, the result is india with lack of investments and depends on world bank loans.
if govt is encouraging us to save much money, we would have saved so much money and that money is very well used in india’s investments/ economy / technology development.
Saving is great art, always we need to encourage them and never screw them.


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