Income tax notice may be issued from this year in case:
• You are not staying on rent; or
• Your employer is not revealing this in the Form 16,
And claiming House rent accommodation in your Income Tax Return.
In such a case the taxpayer receives a notice and he has to submit rent receipts, rent agreement and bank statement to support the exemption claimed in his Return.”
Bank statements are required to be submitted:
The rent agreement and rent receipts can be made bogus easily with the consent of another party. However, Bank statement is the most reliable evidence that can be demanded by the department as it shows the money that the rent is actually paid.
Although, there will be no problem in case you are genuinely claiming exemption on the basis of actual documents.
As per Income tax rules, there is no need to furnish PAN of the landlord’s in case you pay rent upto Rs. 1 lakh per annum. In order to take benefit of this rule, taxpayers staying in rent accommodation by paying rent of approx. Rs. 8300 are claiming this benefit of HRA (House Rent Accommodation).
However, when taxpayer files his return of income, there is no need to submit any evidence, so they might take the benefit of HRA for granted either by claiming the false rent amount of their own.
It is further need to be noted that the government has changed the format of Form 16 from this year (Financial year 2019-20). Now, the Form 16 is in sync with the format of Income Tax Return.
New Form -16 is a detailed form in which everything is required to be submitted. It includes separate columns of all details of all allowances such as HRA, LTA, Pension, leave salary etc.
The major reason of changing the format of Form 16 is to ensure the reconciliation between Form -16 and ITR which will help the income tax department to match the data electronically with all other evidences that can be collected from other sources also.
This sync changes will help to reconcile form 16 and E-filing of Income tax return for FY 2019-20 and in case of any discrepancies, a system generated notice shall be sent to taxpayers for further actions.
So, It’s better for salaried taxpayers to claim the correct benefits with proper documents otherwise it could bring you near the penalty because now the government is taking serious steps to eliminate the loop holes.