Income tax notice to Salaried employee filing return and claiming refund by showing deductions and allowances
Salaried people have been considered to be contributing huge amounts of tax to the government as there is not much amount of expenses/ deductions for them to claim against their salary income as compared to businessmen at large.
Also, no major deductions/ relief has been announced by Indian government to give relief to such employees except a standard deduction of Rs. 50000 which is available to all employees whether they are earning 500000 or 5000000. Hence, to overcome this many employees have started finding different ways to save tax.
Some of the ways to save tax or ways to get fake refund used by salaried employees are as under:
1. Claiming HRA where no rent is actually paid by employees: Many employees just show rent paid to parents staying in their house where no actual rent is paid just to claim HRA benefit and save some tax as parents are majorly in low tax bracket as compared to them.
2. Claiming various allowances or exemptions against salaried employees: Many employees claim various exemptions which was not actually available to them and not granted to them by their employer such as book allowance, education allowance, petrol allowance, conveyance allowance etc u/s 10(14) of the Income Tax act.
3. Claiming deductions u/s 80G and 80GGC of the Income Tax Act: Another method to save tax would be to make donations, however such donations were made to various parties which were actually not doing any work etc and hence Income tax department has sent notices to such employees who have claimed fake deductions for such donations made.
Source: Notice to employed people making donations to political parties: I-T Dept sends 8,000 notices to taxpayers who claimed exemption for charity (business-standard.com)
Such employees generally start with a statement while filing their return that they need a refund and this is where problem lies as employees are generally not liable for any refund as their tax is deducted by employer as per slab rate and claiming a refund every year makes the income tax department alert.
Further, if an employee claims refund every year it could mean that assessee could receive notice and would end up paying more than what he actually saved in form of interest and penalty. Also, such professionals won’t help you when you get any notice from income tax department.
Hence, it is recommended to find a Professional who can help them make proper compliance and save them from stress of income tax notice and penalty, rather than saving some tax and end up paying more tax later and being in stress.
It is very difficult to find a good professional who gives you professional guidance for your income tax return and if want one such professional click on below links to file your income tax return or help you with your income tax notice.
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