It is the time of the year when you file your income tax return (ITR). It is the time you take into account your income, savings and expenditures to gain the maximum tax benefit. While doing so there is an obvious temptation of understating your income or overstating your investments so that you can get higher tax refunds. There are reportedly many chartered accountants who on 10 per cent cut of refund amount are filing wrong income tax return . Also Read - Income Tax Return 2018: What Happens if You Don’t File ITR by July 31; Penalties, Interest Can Increase Your Tax Liability
There are CAs who reportedly promising higher refund to taxpayers by providing wrong deductions to them under the Income Tax Act. For example, Section 10, includes a list of deduction ranging from agriculture income, income received by a co-parcener under Hindu Undivided Family (HUF), travel concession to an employee, among many others. Similarly, there are CAs who are claiming a refund by showing higher investments considering one doesn’t need to submit proof of their investments while filing the income tax return. Also Read - Income Tax Return 2018: Know Tax Slabs And Your Tax Liability To File ITR 2018
The Income Tax Department is quite strict these days with more information at their disposal, it has become highly risky as any wrong information can fetch you a tax notice. With the advancement of the technology, it is always better not to risk a tax notice just for claiming a tax refund. Also Read - Income Tax on 5 lakh Salary is Rs 2,575. Visit www.incometaxindia.gov.in to Calculate Your Tax Liability
The income tax department has clearly stated in an advisory issued earlier that such offenses will be punishable under various penal and prosecution provisions of the Income Tax Act.
In the case of under-reporting, there is a penalty of 50 per cent of the tax payable, provided it is proved that the mistake was due to negligence or ignorance of the person.
If there is any misrepresentation which means there is suppression of facts either due claiming a deduction which is not supported by any document or recording of any false entry, then it is considered as a breach of trust inviting heavy penalty. The penalty could be as high as 200 per cent of the tax payable on the misreported or assessed income.
It is therefore advisable not to fall into the trap of refund. The Income Tax department is watching you and can invite unnecessary trouble for you.