Should we worry about HRA and Medical Bills ???
A colleague approached me and asked me to sign on a paper titled "Rent Receipt". She had prepared the format herself and wanted me to sign on it....she said I was her paying guest owner and wanted me to put some dummy signature. I was wondering why she had to approach me at all in the first place. Well she herself could have done the signature...was she planning some major crime??
Nooooooo it was tax time!!...and we had to submit our saving certificates/medical bills/rent receipts/home loans etc...
She stayed at a PG paying 3000 odd bucks per month. She was claiming HRA (House rent allowance) of more than 3000 INR and so she could approach the house owner for his signature. She is not the only one who is doing this; more than 95% of salaried people do this.
People doing such things are normal people like you and me, not some criminals.
When it comes to paying tax, each one of us gets brilliant ideas to avoid tax. The culprit is not just the tax payee but also the authorities responsible for framing these rules (or should I say LOOP-HOLES) 1250 per month which is 15k per annum of medical allowance. Medical bills worth 15,000 would save you 4k-5k INR.
1) All you need to do is pay a meager sum of 4-10% of the bill amount and you have in hand medical bills
2) Some people save on this 4-10% also by striking a deal with the pharmacy store, that they would purchase 15k worth products(non-medical) from the pharmacy and in exchange they be provided with medical bills. Smart!
These medical bills are for treatments ranging from Diabetes-Arthritis-and what not. The bill is taken in the name of parents to be careful so as to not to run into any problems later on.The bills are professionally prepared; the person prepares monthly bills with ease, taking care of receipt number, doctor's name etc. And you dont need any prescription for this (In the worst case a doctor will come to save you, he is part of the gang!!)
Its a known fact that people fake medical bills to save tax, why cant the authorities remove the requirement of the need to produce medical bills to get tax benefits when the entire IT(Income Tax) department knows what is going on behind the scenes.
Either people should not adopt such smarter ways (which is next to impossible!!) or the authorities should mend the rules. It is not that simple, in the entire process we are introducing corruption. The Pharmacy has to pay 4% tax on the billed amount; on top of that he has to make money so he charges more than 4% which is his margin. Some pharmacy stores go even beyond this by creating fake bills for which he doesnt pay even a pie taxNow the sales tax people also know that this is happening so the pharmacy guy makes a deal with the sales tax professionals also. What about the doctor??? Yes he is also part of it, his role is not so important here unless some strict officer makes a serious check on these bills
We ourselves are involved in introducing corruption, but we do talk a lot when it comes to politicians being corrupt!! Strange :)
Why do we have to stick on to such rules??Next is the HRA (House Rent Allowance) which is taxable if you are not renting a home. I know many friends who create fake rent receipts most of the times faking signatures of house owners, and some even produce rent receipts even staying at their own house that they are paying rent to their parents ! Honestly I also did produce fake medical bills (Only Once!!!) for around 10000INR by paying 4% of the bill amount. If I didn’t do so I would be loosing appx 30% of 10,000INR. To save 3k i just had to spend 400INR. I did choose paying 400 to save 3k!! I filed my tax returns and well nothing happened...no one ever checks these documents i guess!!
But then i thought over it a lot and i had a strange feeling that i was cheating myself by indulging into such activities. I decided that from next year onwards no matter what i would never ever produce medical bills.
People close to me said i was pretending to be too clean a person an ideal person etc....I did not heed to their words ...i am not an ideal person but yes if something is in my hands then i will definitely try not to take the wrong path. Software Engineers are supposedly highly paid professionals and if educated people also do not pay taxes, whom should we expect to pay tax ???
The maximum one can save on medical bills is 30% of 15k, which is 4.5k per annum 400 odd bucks per month. Now think for a moment is it worth producing fake bills for 400 INR per month ???
If your answer is YES, let me try again ....The way I see it is, medical allowance and HRA given in CTC are extra benefits. So if your total CTC is X. I see my CTC as only X minus Medical minus HRA. So now medical and HRA are not my CTC and so i do not bother about saving tax on the additional benefits which i am getting. I urge people not to fake receipts instead if you really want to earn money, prove yourself at workplace and ask for more CTC. Plan your investments, make smart investments there are hell lot of opportunities to make money the right way.
This way you would never need to worry about fake receipts.
