Fraudulent CAs Problematic In India

During India’s recent tax filing season, chartered accountant insurance was in demand, thanks to the common phenomenon of conmen masquerading as chartered accountants. These so-called CAs falsified taxpayer income returns for their clients which resulted in large refunds, ranging from Rs50,000(about USD 712) to Rs 2 lakh (about USD 2,851).

These fraudulent CAs got refunds for their customers by understating their taxable income, or by claiming certain tax deductions and exemptions. This task is made easy by the fact that deductions or exemptions claimed in an income tax return require no supporting documentation. A Mumbai-based CA explained, saying that one can claim deductions for medical insurance, education loan, or even deductions for disability of self or dependent without needing to verify their claims with any evidence. In exchange, these fake CAs take a cut of the refunds, getting a share of about 10-15%.

Thousands of taxpayers in the country used these illegal channels to file their income returns and claim refunds. All a taxpayer really needs to do is to get and provide the Form 16, alongside the Aadhar, and the bank account number, and their return will already be set.These fake CAs take about a week to work, utilizing their knowledge of the Indian tax filing system to get by the book.

Tax experts in the country, however, have warned that the discrepancy put up by these people will likely be detected when the return is put up for assessment. Until recently, tax deducted at source (TDS) information found in their Form 26AS can be used to match up the numbers with the tax declared in the return. CFO Sudhir Kaushik, Taxspanner.com, says that the tax department has altered their methods, with the process now involving a check of the Form 16 to match it with the income declared in the return, which is why it’s best to have chartered accountant insurance and go through legitimate channels.

Chartered Accountant and Managing Director Raj Khosla, MyMoneyMantra.com, says that if the assessing officer smells deliberate intent in income misreporting, they can slap a fine, as well as start the prosecution of the taxpayer.

If a taxpayer has knowingly claimed a deduction or exemption and does not have proper documentation to back it up, the it is considered an infraction; tax concealment, which has a 200% penalty.