How To Protect Yourself From Tax Fraud?
With internet becoming an indispensable part of daily life, the number of online frauds has also increased in recent times. While the number of tax frauds in India has been minimal, individuals are still at risk from the same. Owing to its robust taxation system, taxpayers enjoy protection against the different types of frauds that are prevalent in several developed countries.
Nonetheless, tax evasion is quite prevalent in the country. In fact, as per a report published in Business Today, India loses over $10.3 billion each year due to tax evasion by corporates and private tax evasion.
Types of tax evasion
Tax frauds occur when individuals or business organisations deliberately distort information on a tax return to restrict their liability. Here are some of the most popular types of tax evasion noted in the country –
- The government has set exemptions for certain sections of people to ensure the reduction of financial liability. In some cases, individuals who don’t qualify for such advantages create fake documents and claim them.
- There are instances where individuals submit false or incorrect information to reduce the tax amount.
- The maintained offshore accounts do not disclose their dealings to the Income Tax Department and evade taxes applicable on the amount.
- When certain goods are transported from one location to another, a particular tax is charged on them. Sometimes these goods are moved secretively to avoid tax.
Nonetheless, while tax evasion is the more prevalent problem in India, it is equally crucial to learn about how to protect oneself from tax frauds, just in case.
Steps to protect yourself from tax fraud
Since there is an increase in the number of individuals accessing the internet, online frauds are also on the rise. Following are a few measures that one can adopt to safeguard his/her finances against tax scams. Some of the online fraud protection measures are listed below:
- Early filing
- Secure tax filing
- Staying alert of data breaches
- Notice warning signs
- Working with qualified tax preparers
- Freezing your credit report
Apart from tax frauds, individuals should also be aware of other types of online scams prevalent these days to maximise financial protection.
Types of internet fraud
While most individuals are turning to digital platforms for banking and other financial solutions, there is a huge void among the general populace regarding online literacy. Fraudsters turn up with unique tricks to deceive individuals and extort money from them. To protect one’s identity and hard-earned money, those using the internet should be aware of the types of online scams and undertake effective fraud prevention measures. Few of these types include –
- Identity theft
- Lottery fraud
- Tax scams
- Credit card scam
- Social media frauds
- Phishing or email scam
- Internet banking fraud
- Online shopping frauds
- Phone scams
Apart from various types of internet frauds, credit and debit card scams have increased in recent times, owing to thousands of wallet theft incidents every day where individuals end up losing important documents and essentials.
When individuals somehow misplace their wallet, there are chances that their credit card information, alongside personal information, can be exposed. During such instances, individuals can protect their cards with Wallet Care plans offered by financial institutions like Bajaj Finserv under its Pocket Insurance & Subscriptions.
Alongside their cards, losing essential personal information, leading to impersonation, can cause individuals to incur substantial monetary losses. To mitigate such risks, individuals can opt for insurance policies like identity assure to safeguard their finances from fraudulent activities.
Availing similar insurance policies like purse care cover, that help to block lost or stolen cards and offer financial coverage against the loss is also advisable. With such insurance policies in place, one can easily alleviate the financial losses arising out of online frauds that are more prevalent in India than tax scams.