Bengaluru: The Income Tax Department, Karnataka & Goa, recently conducted surveys on several paying guest accommodations in Bengaluru under Section 133 A of the Income Tax Act and found most of them conducting business in violation of income tax rules.
"The migrant population consisting mainly of students and working professional pay steep amounts for minimal facilities like bed and boarding. Most of these paying guest businesses are unregulated and found to violate multiple laws including the provisions of the Income Tax Act. It is found that the PG accommodation business is a flourishing cash economy. No record of receipts are maintained systematically," said the official spokesperson of the I-T Department.
"The occupants normally pay a deposit; which varies from one to six months of the rentals. In some cases, there are neither receipts given for such deposits nor any refunds given as various charges are deducted, when the occupants leave the PG. Short term stay is left unrecorded. Many records are partial and incomplete showing only two occupants when five people are accommodated in a room. It is also seen that about 80 per cent of the expenses are in cash. The major portion of cash expenses is made to the building owners on account of rentals who on their part do not account for such rentals as income," the officer stated.
The Department has found that many PG owners do not file Income Tax returns although most of them have income above taxable limits. It is also seen that many PG owners take a composite amount towards food and rent. However, the occupants either avail of food from outside or cook in their own rooms. Therefore, the claim of expenses towards food cost is also inflated by the owners.
"It was noticed that the PG owners, who are opting for provisions of Sec. 44AD offering income on presumptive basis are required to furnish basic information regarding sundry debtors, sundry creditors, stock in hand and cash balance while filing Sugam ITR-4. No records were available and receipt vouchers and documents were systematically destroyed. Even when the accounts are maintained in accounting software, entries are systematically deleted.
The Department has asked the PG owners to comply with the income tax rules and is organising an outreach programme for them on February 20 at SBR Palace, Tulasi Theatre Road, Marathahalli, Behind MORE Super Market, Bengaluru at 11.30 am....