Cheated in your tax returns? You may end up in jail

cheated-in-your-tax-returns-you-may-end-up-in-jail

It’s 2018 and things have changed, now the taxpayer has to explain all the exemptions claimed by him while reporting his income in Income tax return and not the Tax preparer i.e Chartered Accountant or any other person authorised to prepare ITR. The taxpayer would be the person who would have to answer and explain every deduction he claimed.

There are several frauds being committed while filing taxes, people are evading taxes by showing less income or claiming fraudulent deductions. This is easy to do because no proof is required to be submitted while claiming these deductions in Income tax return.

How do some taxpayers evade taxes?

There are a lot of loopholes in our Indian taxation system and some of the cunning and clever ones don’t forget to take advantage of these loopholes. Here are some of the most commonly ways by which taxpayers evade taxes.

  1. Claiming fraudulent deductions- The most common way of evading taxes is by claiming false deductions i.e deductions which are not actually admissible but still claimed. Deductions like Deduction under section 80D for medical insurance premium (MIP)
  2. Donations- Yes, although donations are something you give by your heart but some people donate money to evade taxes.

How do they donate money and save taxes?

Well the thing is, first they donate money to some charitable organisation and claim 50% or 100% deduction  whichever is applicable and they take their money back in Cash.

But these frauds will not let you go a long way as you can’t hide facts for too long. Everything is linked with Aadhaar now and if you are claiming deductionder section 80D for medical insurance premium but you haven’t actually paid for any medical insurance then this fact will be known to the Income tax department and there are consequences for deceiving the Income tax department.

Penalties and legal priceedings for misrepresentation in ITR-

If the IT department finds out that you have knowingly shown less income or claimed higher deductions to fraud the government and evade taxes then there is penalty of 200% of the amount of tax evaded and tax officer may hold legal proceedings against you.

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