How can a salaried person in India cheat on Income Tax?
Cheat on Income Tax: It is possible for a salaried person in India to cheat on an ITR or income tax return. People often do various things to keep their finances from being lost. But that does not mean that these actions are legal.
You have to be aware of these points as they are ones that you need to avoid getting into. Cheating your ITR is only going to put you at risk of possible harm with the law.
Some people will make improper declarations on their income tax filings. These include deductions on items that people might not have actually purchased. People do these to try and low their debts based on what they have to spend. The greatest concern is that some people might not have the proper evidence. Or information needed to confirm that a certain action was made.
Poorly Handled Salary Restructuring
People often cheat on their taxes by restructuring their salaries. Some of the salaries that one has might be restructured based on how well these totals are to be factored into taxes. This is a concern that can be dramatic in some cases, but it is vital for people to watch for this. Any salary changes might have to be listed in one’s tax return to ensure the changes being handled are legal.
Abusing Section 80C
Section 80C states that investment items like life insurance premiums, public provident funds, and any equity-linked savings schemes may be covered. The Section 80C report states that people can get deductions of Rs. 1,00,000 through this point. But this is a point that many people can abuse.
A person might take in a certain investment and take in the receipt, only to then cancel out one’s investment in something. But that receipt might still be reported even though the content involved is no longer relevant. This is a cheap way among many people to try and keep them from getting caught mishandling the funds that they take in.
What About Section 80D?
Section 80D is a relevant part of the taxation process that also includes deductions. Section 80D can be utilized to report on deductions for medical insurance. Up to Rs. 15,000 can be deducted regarding medical insurance for the self, for one’s spouse, and for any dependent children living in the same house. The total moves up to Rs. 20,000 when the insurance is for a person who is at least 65 years of age.
But Section 80D is also very easy for people to abuse. A person could still cancel a policy and report on the receipt for the insurance as something that had been used throughout the past year. This is an abuse that can be easy for many groups to fail to recognize or notice.
Bonuses are often appealing, although many people will find ways to get their bonuses shifted. When taxes are to be reduced in the next year, a person might try to push a bonus to another year. This is done as a trick for trying to keep taxes down, but this is also a move that is legal. It is up to an employee to find a way to get the bonus moved out to the next year on one’s own though. It becomes easier for the transaction to be managed when this is done, although it takes a bit of effort and coaxing at times.
Donations to non-government organizations can be a concern. In such a case, a person might donate a cheque to a group and then claim a deduction under Section 80G. After that, the person will take the money back in cash while paying off a commission. This is often done by people who work for those organizations. People regularly do not report these donations. They take advantage of the rules to try and keep their tax debts from being as much as they might assume they could be.
Capital Gains Problems
People often fail to report on the capital gains that they earn. These include the gains that a person gets off of certain investments. The lack of reporting, in this case, can be a concern for some people, what with the money being vital based on how a person has made substantial profits over some of the things that one has utilized or worked within the past year.
Some house rent allowance or HRA moves are used to try and keep a person from being likely to spend more on taxes from this point. A person might pay rent to people who live in a house. This may also entail a person paying money for living in that said house. This may come even as nothing is paid. A person might falsely report HRA totals even when nothing was moved in the transaction process.
All terms in a rent agreement have to be registered with the government. A cheque should be used in the payment process to create a proof of payment. But many people will avoid doing this in the hopes of avoiding concerns surrounding the rent that one takes in.
It is also not illegal for a person to claim the HRA for the rent being paid to a parent. However, all rules associated with handling the HRA function should be followed to avoid any possible difficulties that may come about with getting the transaction managed the right way.
What Are the Penalties?
The penalties that may come about for not handling one’s income tax filings the right way can be high. A person may be penalized 50 percent of the taxes that were due. The total could rise to 200 percent of those taxes depending on the value and the severity of the issue at hand.
A Final Note
The issues that come with cheating on an income tax filing can be risky. It is vital for any person in India who needs to file taxes to watch for what one is doing with those taxes in any situation. This is to ensure that a person is not at risk of getting into any significant problems.