Tax time can be a headache, especially for investors. The government is now using technology to check your tax return against your financial records, making it easier than ever to catch mistakes or deliberate fraud. The good news is, if you follow a few simple rules, you can file your taxes stress-free and avoid serious problems like penalties and even jail time.

What to Avoid When Filing

The tax department is paying close attention to a few key areas. Here’s what you need to be careful with:

• Don’t claim fake investments. Only claim deductions for investments you actually made in things like PPF or NPS. The tax department has records of your transactions, so they know exactly how much you invested.
• Report all your income. Whether it’s from crypto, foreign investments, or trading stocks, you must report all your gains. The government gets reports from banks, brokers, and other financial institutions, so it’s impossible to hide this income.
• Be honest about your donations. If you claim a deduction for a donation, make sure you actually made it and have proof. The government can check if the organization you donated to has a record of your gift.
• Match your documents. Your tax return should match the information on your Form 16 (from your employer) and other documents. If there’s a difference, the tax department will likely ask you to explain it.

The Consequences of Evasion

If you’re caught making false claims, the consequences can be serious:

• Penalties: You could be forced to pay a penalty of up to three times the tax you tried to avoid.
• Imprisonment: In serious cases, you could even go to jail for up to seven years.

A recent example of this is the case of over 90,000 employees who were found to be making fake claims for investments and other expenses. They faced severe consequences, including penalties and even imprisonment.

What You Should Do Now

• Review your tax return carefully before you submit it. Double-check that all your numbers are correct and that they match your financial records.
• If you’re unsure about anything, consult a professional tax advisor. A professional can guide you through the process and help you avoid any potential issues.