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Employer pays salary to employee wife account

This query is : Resolved 
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(Querist)
20 June 2024 An employee joined an organization with a package of Rs. 40 Lakhs. The employee asked the employer to issue one offer letter for Rs. 20 Lakhs in their name and another offer letter for Rs. 20 Lakhs in their spouse's name. The employer agreed and provided the offer letters accordingly. Is this legally allowed? It seems like they are trying to evade taxes.
Please share your views in detail along with sections. and whether it is legally allowed.

WHAT IS THE IMPACT ON EMPLOYER ? TO SUPPORT THIS TYPE OF ACTIVITY ? HOW TO REPORT THIS TYPE OF ACTIVITY TO IT Department
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CA R SEETHARAMAN

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CA R SEETHARAMAN (Expert)
20 June 2024 It's legally not allowed.
Yes, they are evading taxes.
As per Section 271(C) of the Income Tax Act of 1961, in case of hiding or understating your income, the penalty can be anywhere between 100% to 300% of the amount of tax that was due but not paid.
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