In order to avail of perks from HRA exemptions people often use fake rent receipts and save adequate tax money. But it is a crime and there’s a higher possibility of facing severe punishment by law. As the name states the “Fake rent” receipt is a false and fraudulent document that is a copy of the legitimate rent receipt.
Moreover, certain traits make fake ones different from the original ones. The false rent receipt is quite common practice but you can identify it by noticing higher HRA expenses. Even though this receipt can deduct taxable income but using these receipts is illegal.
Some users might need to pay hefty penalties and fines whereas others might need to face severe imprisonment. Let’s unveil more about fake rent receipts and the consequences associated with them in the forthcoming points.

Also Read: Importance of Rent Receipts​

Vital Aspects To Know About Rent Receipt For HRA Exemption 

Employers need to be attentive and cautious while examining rent receipts. They should have adequate information regarding the red flags associated with it. As neglecting those flags can approve the fake receipts and they might need to deal with multiple issues. In the forthcoming points, we have mentioned some traits that can help you to identify fake rent receipts.

  • Fake Pan Card Details: when you are looking for the fraudulent trait in a rent receipt always match the pan card numbers. Double-checking pan card details can help you to figure out whether the receipt is genuine or not.
  • The Rent Agreement: you need to look for a valid and genuine rent agreement along with a rent receipt. It can help a person claim HRA perks. But, if the rental agreement isn’t attached to the receipt then it is a clear indication that such a receipt is wrong.
  • Higher Rent Amount: if you notice an uncommon amount of rent that is extremely high then it is a false receipt. So you need to ensure that the receipt is genuine or fake and should enquire about it.
  • Suspicious Dates: don’t forget to take a closer look at the date of the rent receipt. If it isn't aligned with the previous rental history then something is not right there. This shows there’s a high possibility that the receipt is fake.

Penalties For Using Fake Rent Receipts

  • When you are about to make a financial decision ensure the transparency and integrity of a solid financial foundation. Using the fake receipt to deduct the taxable income is a sign that you are breaching the key principles of a robust financial foundation.
  • Besides that, it carries severe consequences as you can get a legal notice against you. The income tax department takes a closer look at such activity and ensures that there are no more fraudulent documents available.
  • Therefore, any suspicious activity can lead you to legal notice where you need to collect proof in your favor to avoid punishment. According to the income tax act 1961, the authorities have adequate power to impose hefty penalties.
  • It can be around 50% for under-reporting of income whereas it can be as high as up to 200%. Higher penalties are imposed if the misreporting was intentional. Moreover, an individual is liable to pay interest as per sections 234A, 234B, and 234C according to the income tax act.

Key Considerations To Remember For Avoiding Accusations of Fake Rent Receipts

The listed aspects can help you to avoid the complications or accusations of using forged rent receipts.

  • ​Try to pay rent via online sources or cheques.
  • You should have a legal agreement from the landlord.
  • If you have paid rent that exceeds the limit of INR 1,00,000 in a year then you should have the landlord’s pan data from the allotted receipt.
  • The tenant should have a record of paid utility bills.
  • In some cases, people have rent receipts from closer relatives in that case they need to have specifics of rent. It should be mentioned in the ITR as well and matched with the data listed on the rent receipt.
  • If your landlord doesn’t have a pan card then the declaration should be submitted with the filled form 60.

Conclusion

The legitimacy of the rent receipts is your responsibility. You should avoid using fake receipts as it enables you to deal with the worst case scenario.