Every taxpayer has the right to save on taxes legally, but some misuse this by submitting fake documents for tax exemptions. The Income Tax (I-T) department uses artificial intelligence (AI) to detect such fraud, particularly with fake rent receipts.
Every taxpayer has the right to save on taxes within the bounds of the law. Both the old and new income tax regimes offer various sections dedicated to tax-saving opportunities. While it is beneficial for taxpayers to take advantage of legitimate tax-saving measures, some resort to unethical practices like producing fake documents for tax refunds or exemptions. They mistakenly believe they can outsmart the Income Tax (I-T) department. However, in the era of artificial intelligence (AI), the I-T department has sophisticated methods to detect fraudulent activities. As the deadline for filing Income Tax Returns (ITR) approaches on July 31, 2024, it is crucial to understand how the I-T department identifies fake rent receipts.
1. AI in Action: Detecting Fraudulent Claims
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2. HRA Claims and AI Verification
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3. Understanding HRA Rules
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4. Understanding HRA Rules
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For those claiming an annual rent of less than Rs 1 lakh, providing the landlord's PAN is not required. In these cases, HRA claims up to Rs 1 lakh are generally not scrutinized by the I-T department.
5. Why HRA Fraud Occurs
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The potential for significant tax savings drives HRA fraud. For example, claiming a monthly rent of Rs 25,000, or Rs 3 lakh annually, can exempt that amount from taxation. This incentive leads some individuals to submit fake rent receipts, believing they can evade detection. However, the I-T department's advanced AI systems are increasingly adept at identifying such frauds and issuing notices accordingly.
6. Why HRA Fraud Occurs
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