Prove Probity of Your Claims! Taxman - The New Axeman
The Finapolis|May 2017

Submitting faulty claims could up your tax outgo, while a fake claim attracts up to a 300% penalty

Pranav Sakhadeo
Prove Probity of Your Claims! Taxman - The New Axeman

Most of you might be relieved at having made your final income tax declarations for 2016-17 so as to avoid any last-minute deductions by HR. But think again. Did you submit all the documents to claim the deduction? Take guard, for the taxman is watching.

What could happen, you ask? If you are not able to prove your claim to a deduction owing to inability to submit valid documents, the claim will be rejected by the Income Tax Department and a penalty and (interest if applicable) will be imposed. The taxman could ask you to cough up a penalty of 100-300% on the tax payable, while the rejected deduction amount will also be added to your income and you will be liable to pay tax thereon.

The message: Make sure you are eligible to claim a deduction on expenses/ investments and double-check the proofs that you submit.

Don’t fake that bill

Let us examine the paper-trail that you have to maintain to claim some popular and some unknown income-tax deductions:

House Rent Allowance (HRA)

House Rent Allowance is a common component of everyone’s salary. Even though it is included in salary, it is not completely taxable. HRA gets exemption under section 10(13A) of the Income Tax Act, 1961, according to the below parameters:

Quantum of exemption (least of the following):

i) Actual HRA.

ii) 50% of salary if living in metros. 40% of salary for non-metros.

iii) Excess of rent paid annually over 10% of annual salary. Proofs required:

i) Rent receipts.

ii) If annual rent claimed exceeds Rs 1 lakh (PAN of the landlord and the rental agreement must be produced).

This story is from the May 2017 edition of The Finapolis.

Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.

This story is from the May 2017 edition of The Finapolis.

Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.

MORE STORIES FROM THE FINAPOLISView All
7 Ways to Prevent Text Neck
The Finapolis

7 Ways to Prevent Text Neck

Our head is heavier at an angle than it is at a neutral position. That means our increasing usage of smartphones for reading, texting, etc is putting undue pressure on our spine

time-read
3 mins  |
September 2016
How To Take Your Networking To Next Level
The Finapolis

How To Take Your Networking To Next Level

Networking is one of the best ways to use your time

time-read
4 mins  |
September 2016
5 Fun Ways To Save Money
The Finapolis

5 Fun Ways To Save Money

There are several simple ways to reduce spending and rack up more cash. Sukanta Kundu lists some interesting ones.

time-read
4 mins  |
September 2016
In Search of Higher Returns Amid Falling Rates
The Finapolis

In Search of Higher Returns Amid Falling Rates

As Bank Deposit Rates Fall, Even Conservative Investors Are Switching Assets. Where Can They Go? 

time-read
5 mins  |
December 2016
National Savings Certificates Help as Interest Rates Fall
The Finapolis

National Savings Certificates Help as Interest Rates Fall

National Savings Certificates (NSCs) have been among the most popular tax-saving options for ages. In spite of the advent of market-linked investment products such as equity-linked savings schemes (ELSS), the certificates have retained their charm for certain sections of society. In this column, let us discuss the various facets of this special instrument of investment.

time-read
3 mins  |
December 2016
What Drives Us to Invest?
The Finapolis

What Drives Us to Invest?

I had made the journey from economics to finance. As part of Keynesian economics, we were taught about the three motives to hold money: the transactions motive, the precautionary motive and the speculative motive; all through my teaching career that remained part of my Keynesian economics. But two decades, later when I immersed myself into the world of investment, I had to develop my own tools to understand the new discipline and make my investors understand the working of their own minds. One night as lay turning on my back, poring over the day’s happenings, suddenly I made a strong connection between what I had studied years back and the problem I was grappling with now: the motives.

time-read
4 mins  |
December 2016
Ask The Finapolis
The Finapolis

Ask The Finapolis

Col. Sanjeev Govila (retd) of Hum Fauji Investments answers readers’ queries on investments, taxation and personal finance. Do you have a question you want answered? Email your question to feedback@thefinapolis.com

time-read
9 mins  |
June 2017
Input Tax Credit To Benefit End-customer
The Finapolis

Input Tax Credit To Benefit End-customer

Looking at the scale of India, it is reasonable to expect 3-5 years for the system to stabilize

time-read
4 mins  |
June 2017
Will GST Really Spike Up Your Bills?
The Finapolis

Will GST Really Spike Up Your Bills?

As goods and service providers can claim input tax credit, your net tax bill will reduce say experts

time-read
4 mins  |
June 2017
The Bull Run Is Here To Stay
The Finapolis

The Bull Run Is Here To Stay

Karvy Finapolis’ event —“Is this the mother of all bull runs?” — evoked a thunderous response from investing public recently in Hyderabad.

time-read
4 mins  |
June 2017