Fraudulent HRA (House Rent Allowance) claims on income tax returns can result in severe penalties.
Taxpayers often misuse HRA exemptions by claiming deductions without living in rented accommodations or submitting fake rent receipts.
The Income Tax Department uses various measures to verify claims, including data analytics and information from landlords. If discrepancies are found, taxpayers can face penalties up to 200% of the tax evaded, along with interest and possible prosecution. Proper documentation and accurate reporting are crucial to avoid these penalties.
You can read the full details in the Mint article here.
