Claiming HRA to get harder as govt cracks down on fake house rent receipts

I-T department could now ask for supporting documents to prove that you are a genuine tenant

If you have been producing fake rent receipts to lessen your tax burden there is a bad news for you now.

You may no longer be able to claim income tax deductions for house rent allowance (HRA) by fabricating fake bills. The income tax department may now ask for proof from the tax payer showing that he is a genuine tenant.

According to a report in Economic Times, Dilip Lakhani, senior tax advisor, Deloitte Haskins & Sells LLP said, "The ITAT (Income Tax Appellate Tribunal) ruling has now laid down the criteria for the assessing officer to consider the claim of a salaried employee and if necessary question its justification. This will put the onus on the salaried class to follow the rules in availing the tax rebate.”

ITAT Mumbai recently struck down the HRA exemption claim of a salaried individual for rent paid to her mother. This opens a pandora's box for all salaried people as now an IT officer can ask for proof such as leave and licence agreement, letter to the housing co-operative society informing about the tenancy, electricity bill, water bill and so on.

Till now, a salaried person receiving HRA could escape paying tax on 60% of the amount by submitting a rent receipt. Now, it may not be possible as the department could ask for supporting documents.

This Tribunal ruling comes a few months after the government's decision to cap the loss on property bought with borrowed money. According to this ruling a person producing fake rent receipt will be deemed as counterfeit and no required documents will be available with him. There may not be any genuine rent outflow from the person and in some circumstances even if the person is a genuine tenant, the amount mentioned in the receipt may be more than what's paid.

However, if you pay more than Rs 1 lakh annually towards house rent, then quoting landlord's PAN is mandatory for claiming tax benefit under House Rent Allowance.

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Jewellers shut shops for 12th straight day after income-tax surveys

Gold and jewellery establishments in the national capital remained closed for the 12th day today after the Income Tax Department conducted surveys following reports of alleged profiteering and tax evasion by traders and other operators in reported conversion of demonetised notes.

The survey operations were carried out on November 10 in at least four locations in Delhi-NCR region, including Dariba Kalan, Chandni Chowk and Karol Bagh.

The government on November 8 announced the demonetisation of 500 and 1,000 rupee notes to flush out black money.

Most of the jewellery houses have been closed since November 11 in the national capital.(more)

After daughter's Rs 500-cr wedding, I-T raid at Reddy's mining company

Since hosting his daughter's lavish wedding, in which he apparently splurged Rs 500 crore, Bellary mining baron Gali Janardhana Reddy has been on the income-tax radar. The I-T department on Monday raided Reddy's Obulapuram mining company in Bellary.

Reddy had hosted the opulent wedding at the Bangalore Palace grounds on November 16.

Earlier, Reddy, then state tourism minister in the B S Yeddyurappa-led Karnataka government, had been arrested in 2011 on the charges of illegally mining iron ore and jailed for over three years. He is said to have made Rs 5,000 crore through iron ore mining in Bellary. The criminal charges against him relate to the Andhra Pradesh branch of the multi-billion dollar mining empire that he runs with family and two brothers.

The five-day wedding extravaganza that he hosted earlier this month included ceremonies held against the backdrop of lavish settings. The ostentatious wedding had stirred up a huge row over its timing, when people across the country were reeling under cash crunch after the central government's move to demonetise high value currency notes.

Palace grounds, which plays host to grand weddings, presented almost a surreal picture as Reddy's daughter Bramhani entered into a wedlock with Rajeev Reddy, the son of a leading businessman from Andhra Pradesh, with rituals conducted by a battery of priests from the famous Tirumala temple.Read more

Panama Papers: Why probe by Indian agencies may yield nothing

Black money is back in focus with the expose by the International Consortium of Investigative Journalists that shows  hundreds of Indians were shareholders and/or directors in companies incorporated in distant islands by Panama-based firm Mossack Fonseca in a bid to avoid tax.

Soon after the revelation, the government declared that action will be taken against said accounts held abroad by Indians and constituted a multi-agency group to continuously monitor information. Panama papers have named 500 people, including film actors and industrialists who have allegedly stashed money in offshore entities.

The assurances given by the BJP-led government to bring back black money in India has largely being ineffective. Possible reasons would be polices that have been established to curb accrual of black money have not been enforced by the agencies or existing legal and administrative framework which has its own limitations.

Is it so easy to float a company abroad? Would they able to get evidences against the said entities named in Panama Papers? What are the limitations, Business Standard explores.

Is it so easy to float a company abroad?

Some countries are following the disclosure norms reluctantly, while in some jurisdictions, the KYC norms are more liberal than others. According to the Reserve Bank of India (RBI) norms, liberalized remittances scheme (LRS) allowed individuals even minors to remit amount up to $250,000 ( Rs 1.65 crore as on date) each year abroad under self declaration. This is for studies, medical treatment, buying property overseas or holding shares in an overseas company or a combination of both.

Will they get evidences against entities named in Panama papers?

Getting information from other countries is a cumbersome task. There are limited options before Indian authorities which includes Letter Rogatory (LR), a formal request from a court to a foreign court for some type of judicial assistance. The most common remedies sought by LR are service of process and taking of evidence.Read More.

Budget 2016: Easwar panel wants higher threshold & lower rates for TDS on bank deposits

Ahead of the Union Budget 2016, a committee asked to make recommendations on simplifying the current income tax (I-T) law has recommended a higher threshold for deduction of tax at source and cuts in rates, plus measures to reduce litigation.

The Union Budget 2016-17 is to be tabled on February 29.   

The 10-member panel is chaired by R V Easwar, a former high court judge. Appointed in late October 2015, its first report, 78 pages, was given on Monday. This is a draft report, issued to elicit feedback before finalisation. It focuses on simpler issues that it feels need immediate attention. Comments have been invited till the coming Saturday, after which the committee will finalise the first part of the report by January 31.