The Income Tax department has detected numerous instances where salaried taxpayers falsely claimed House Rent Allowance (HRA) to avoid tax obligations.

According to the report, individuals have been found using fraudulent Permanent Account Number (PAN) cards to illegally claim HRA, despite not being actual tenants.

The PAN-HRA Fraud Saga Unveiled

Authorities have identified around 8,000 to 10,000 major cases of such misuse, with most cases involving falsely claimed HRA amounts exceeding Rs 10 lakh.

The investigation intensified after the tax department encountered rent receipts totalling approximately Rs 1 crore under a single individual’s PAN, who was unaware of these transactions and did not receive the attributed rent.

Instances have emerged where employees from specific companies exploited identical PANs for tax benefits.

Tax officials mentioned in the report are actively pursuing individuals who filed fraudulent claims to reduce their tax burden, though it’s unclear if legal action will be taken against offenders.

 The current TDS rule only triggers for monthly rents exceeding Rs 50,000 or annual payments over Rs 6 lakh, enabling many salaried employees to evade taxes on rental income.

Tax experts warn against such PAN-HRA Fraud and schemes, as authorities can easily detect misuse through automated processes, data analytics, and advanced technology.

Individuals engaging in fraudulent practices to evade taxes may face substantial penalties, interest charges, and potential legal action.

So that was all about the PAN-HRA Fraud and Schemes that you need to be aware of. Comment down what you think about the PAN-HRA Fraud!

Pitchers Global is also about protecting you from frauds and schemes like the PAN-HRA Fraud by providing necessary solutions and consultations so that you can safeguard your financial integrity and compliance.