Submitting fake bills to Employer – lower your tax liability?
Be vigilant, Tax department can caught you!
Recently a colleague was preparing rent receipts on his own , signing, putting figures and stamping etc. Seeing this checked the correctness and consequences of the same and founding’s require thinking for a while . Is it worth doing ?
As we look forward to March 2019 ending, many employees have started to receive emails from HR department to submit the copy of bill for any reimbursement or deduction claimed for the financial year 2018-19 you may be in the constant pressure of submitting bills, but make sure you only submit your real bills, as submitting fake bills can end in a notice of under-reporting of Income.
There are many expenses where employee can claim reimbursement from employer and therefore it does not add to his total income of the employee and thus he can save tax. The common reimburse required claim are Medical Bills for reimbursement of Rs 15000/- and Leave Travel Allowance like train and air tickets. For many years up till FY 2017-18, reimbursement of medical bills up to Rs 15,000 in one fiscal was exempted from income tax. Similar tax-exempt reimbursement of domestic travel tickets is permitted, subject to certain conditions, as leave travel allowance (LTA) up to specified limits. There are other similar reimbursements and allowances.
Those who do not have bills of sufficient value to claim the full amount they are entitled to (as per their company policy) may be tempted to claim the reimbursements by submitting fake bills to their companies to get the tax-exempt reimbursement. The income tax department may get to know about the fake deduction at the time of scrutiny of your returns or it may ask your employer to furnish the supporting evidence for tax deducted at source under section 192 and check the authenticity of documents submitted. You must know that Income Tax Department keeps a tab on all your financial transactions, as banks are supposed to intimate the IT Department about all the high-value transactions.
There are many instance in past where HRA claim was made and accepted by the employers based on the rent receipt. However at the time of scrutiny it was found that there was no rent agreement or any proof of payment actually been done. The tax department will ask you to provide documents and transactional proofs such as bank account statement etc. for the same. If you are unable to provide the same, then the department will reject your claim and ask you to pay additional tax on the income along with interest and penalty.
Further in case the rent amount you are paying is less than 1 lac then landlord PAN is option, do remember that many people just provide rent receipt to employer without giving additional documents and information about landlord. Such fake claims can be part of scrutiny and if you are not able to provide agreement and payment proof then you may be liable to pay.
As per section 270A(1), a penalty of 50 per cent will be levied if income has been under-reported. However, if under-reporting of income is a consequence of misreporting of income, then penalty of 200 per cent can be levied. Therefore, an individual’s deliberately submission of fake bills to misreport the income may attract penalty of 200 per cent. So it is better to avoid short cut and create and submit fake bills. Employees are advice to keep records of all the bills and payment made through cash. If the transction is done through net banking or credit card it becomes easy to prove.
CA Ajayraj Acharya
Author Bio
Like Medical reimbursement , LTA should also be a part of salary & should be exempt & so no need of travel proofs is required.