Tax

How many of you under-declare your taxes?

From the people who I know, almost all of them do it. The most common point being HRA - House Rent Allowance, which is exempted from taxation according to the following formula -

I pay Rs.1600 as rent per month, while my total eligibility i.e. 40% of basic is way over this.

To evade tax, one can easily declare higher rent. Usually rent below 3,000 per month doesn't even require a proper rent receipt, and to go above that one can easily conjure up fake/wrong receipts from their house owners. House owners don't seem to mind this too much.

I have never declared more than the rent I actually paid, and yet I know that almost everyone does it regularly and consciously. This post is my personal appeal to anyone walking this line to completely abstain from it, and pay arrears for previous years. There is a general tendency to over estimate the benefits of tax evasion.

Let's calculate the benefits.

Assuming one is well into the 30% tax slab

In above circumstances, a person earning ~5 lacs will save 1,800 to 14,600 ~<15>

For saving 5 to 10 days worth of salary, people are ready to jeopardize their career. A simple and straight forward proof of the wrong doing will ensure that they'll never be hired by most corporation's. Ever!

Last year, when I filed for taxes for the first time, one of my close friends contemplated doing the same. I did the maths for him. He understood. Several others didn't. This year is the same. The horrid mistake is continuing rampantly with newer people making false starts to taxation.

It is not a matter of hurting the nation. Its a matter of hurting your own self-worth. Those who still believe they did right obviously do not regard the value of integrity highly, cause they just debased themselves to zero.

Did you under declare as well? It's never too late and do remember this, this and this --

Willful attempt to evade the payment of any tax, penalty or interest levied under Income Tax Act. [Section 276C(2)]

--
US