On under-reporting of income, a 50% penalty can be levied.If the income is under-reported, the Income Tax Department can levy a penalty of up to 200% of the tax applicable on the income misreported.Here are different types of punishments, for creating fake rent receipts: The level of punishment for creating a fake rent receipt can vary, depending on the amount of rent and the type of forgery. In such cases, the department issues notice to the alleged tax evaders. Owing to the latest legal developments and technological advancements, the Income Tax Department has been keeping track on such fraudulent practices involving fake HRA claims or fake PAN card for HRA. See also: Know about Section 80GG Fake rent receipt punishment Let us find out various punishments for faking a rent receipt. The punishment for a fake rent receipt could be very severe and it could land employees into serious trouble. However, many employees fake the rental agreement and rent receipt to claim HRA benefits. It is mandatory to furnish relevant documents validating the claimed tax exemption. In some cases, employees submit the rent receipt to claim HRA calculation & HRA exemption even if they own a home in the same city.Ĭurrently, there is no law that stops a person from staying on rent at their parents’ or relatives’ house. In many cases, people who fake rent receipts do not mention the PAN detail or they mention a wrong PAN detail, which gets revealed during the verification. For example, it is mandatory to mention the PAN number of the landlord in the rent receipt, if the rent payment is more than Rs 1 lakh in a year. It is important to establish that the rental transaction took place and merely getting the rent receipt from the relative does not constitute a rental activity. In some cases, employees who live in their own homes, transfer the payments to their close relatives like brother or sister and get the rent receipt from them, to claim the HRA benefit. Now, the question is how do they fake the rent receipt? They generate a rent receipt using the online rent receipt generators or by filling the rent details in a rent receipt format and they sign it in the name of a bogus landlord, to perpetrate it as an original receipt. See also: Importance of house rent slip in claiming HRA tax benefit Therefore, some people, in spite of living in their own homes, make fake rent agreement and receipts for claiming the HRA benefit. So, HRA helps in significantly bringing down the effective tax outgo of the employees. According to the IT Act 1961, HRA offered by the employer is not taxable, subject to eligible ceiling worked out based on Basic salary, HRA, and the actual rent paid by the employee.
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