Faking donations or rent receipts? Taxman is watching

Tax experts are cautioning taxpayers against fraudulently claiming large deductions—such as inflated donations to charities, NGOs, or political parties, or exaggerated house rent allowance (HRA) claims—as the income tax (I-T) department has tightened scrutiny of such practices.

- MONIKA YADAV

In many such cases, the department has levied a penalty of 200 per cent of the unpaid tax, making it a costly mistake for taxpayers, say experts. "This year, taxpayers should be very careful," said CA Chetan Daga, founder of AdvantEdge Consulting.

"The government has been following a policy of trust with the taxpayer. Tax returns are now paperless, and people don't have to attach proofs for exemptions and deductions while filing. Also, returns are processed quickly, and refunds come faster. But the government's policy of trusting the taxpayer has kind of backfired due to certain unscrupulous elements abusing the tax system," Daga said.