The instances first got here to mild when authorities discovered alleged hire receipts of round Rs 1 crore by a person.When confronted, the person whose PAN mirrored the “rental earnings” denied any information. Additional probe revealed that the person certainly didn’t obtain the hire that was proven towards his title.
The case prompted the earnings tax division to additional examine the matter and it turned out that there was rampant misuse of PANs by unscrupulous people to say tax deduction from their employers. A lot in order that officers have now come throughout instances the place staff of sure firms have used the identical PAN to say tax deduction.
Tax officers mentioned the division is now going after these staff, who’ve made bogus claims to get better the tax. It’s unclear if authorized motion can also be deliberate towards them. The case displays one other occasion of PAN being misused with out the holder truly realizing about it. On this case, what has difficult the matter is that at present TDS (tax deducted at supply) is relevant just for month-to-month hire of over Rs 50,000 or annual fee in extra of Rs 6 lakh. So, a variety of staff have been misusing the profit to keep away from paying tax on rental earnings.
“Many of the monetary transactions are linked to PAN. With use of newest know-how and automatic processes and knowledge analytics, it’s not very tough for tax authorities to trace pretend claims. This will likely not solely entail tax funds later but in addition will lead to levy of penal curiosity, penalty and even result in prosecution in excessive instances. The place hire is paid to the mother or father, the hire must be paid via cheque or by the use of digital switch (and never via money) to show the genuineness of the transaction and that mother or father too must report that rental earnings in his or her return,” mentioned Kuldip Kumar, companion at Mainstay Tax Advisors.
Tax officers mentioned the fault fully lies with the worker and the employer can’t be held liable even when a number of people quote the identical PAN for hire fee. “Employers usually are not anticipated to make a deep investigation, however the onus can also be on them to have cheap checks and balances, whereas acquiring the proof of hire paid to permit HRA exemption. In truth, in a number of the instances, employers have their coverage that the place any worker is caught having submitted a pretend declare for HRA or LTA and so forth, such worker could also be terminated from employment,” mentioned Kumar.
