A buddy (who prefers anonymity) was reviewing his AIS (annual revenue assertion) earlier than submitting ITR to make sure there isn’t any disparity between the 2. He was shocked to see that rental revenue reported in AIS was twice what he was truly receiving! The tenet was solely paying him Rs. X per yr as lease however was claiming Rs. 2X as lease for HRA utilizing the buddy’s (the owner’s) PAN card!
If this incorrect entry had been left uncorrected, the owner could be accountable 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 yr onwards, the IT division has made out there an annual revenue assertion for all particular person taxpayers. This beautiful a lot contains (or will embrace within the coming years) each digital transaction related to us.
For instance, SB account curiosity, dividends acquired, inventory and mutual fund transactions, and so forth. A landlord’s rental revenue can also be included if the tenant has claimed HRA utilizing the owner’s PAN quantity.
My buddy 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 in opposition to AIS; it’s when this cockroach surfaced. (So one key message you possibly can say is that folks confirm AIS earlier than submitting ITR)
– Then I couldn’t submit and was vastly upset with the man, having almost 20 years of a very good relationship (The subsequent 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 every 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 associates 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 cellular quantity, which the proprietor couldn’t hint.
– Home was let for Lease, however the tenant has claimed HRA underneath proprietor PAN!
AIS can put an finish to such faux HRA claims if the landlords are vigilant.
So what ought to my buddy do?
- Right the error within the AIS by submitting “suggestions” on the revenue tax e-portal by choosing the “Info will not be absolutely appropriate” choice.
- File returns by exhibiting Rs. X because the rental revenue (that is the precise lease acquired as per the rental settlement)
- Maintain data of rental revenue acquired prepared in case there’s a discover issued by the IT dept. This could 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 straightforward guess is that the IT division is prone to search a proof from the tenant and supply him an opportunity to supply documentation to help his declare. If he’s unable to take action, a tax demand with a nice will ensue. When this may occur is unknown.
If there’s a single takeaway from this, the taxman is watching! Any try to evade tax or scale back tax by bogus means (not less than with conditions related to an digital path) can simply be discovered through the AIS. Tax evasion may be fairly costly. Honesty is the “low cost and finest” coverage!
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