I-T authorities unearth Rs 2 crore LTA scam

Income Tax authorities at Hyderabad have busted a major Leave Travel Allowance (LTA) based racket running into a couple of crores in a leading multi-national software company based at the Punjagutta locality in Hyderabad. Sources associated with the I-T Department have told on condition of anonymity that during their investigations in the last couple of months it was detected that several employees - mostly high-profile software engineers - of the company were making false claims of their LTA by producing false receipts from some Hyderabad based travel agencies without actually incurring any expenditure basically to avoid paying I-T.

During the course of investigation by the I-T authorities, 44 software engineers were found to have resorted to these irregularities in claiming their
LTA.

According to a senior I-T official, these software engineers have hefty pay packages - around Rs 6 to 8 lakh per annum and their pay is so structured that they could avoid paying I-T by claiming reimbursement of travel expenditure, apart from medical expenses by producing bills. 

During inspection of the tax records of this particular company, it came to the I-T officials notice that bills produced by the employees were highly exaggerated and illogical even to an amateur eye.

"An engineer had produced an LTA bill for Rs 44,000 for traveling to Shimla in a car from Hyderabad. Another engineer went to Delhi in Maruti Esteem. We got suspicious and started our investigations into the matter," the official added.

The I-T authorities verified the bills with the travel companies - Pan Asia Tours and Travels, Paradise Circle, Sanghi Tours and Travels, Masab Tank, SP Travels, Ameerpet; RK Travels, Car Ventures and Basheer Travels -and found that the receipts were bogus and there was no record with any of these travel agencies. All these agencies would charge commission for giving fake bills, sources said.

The I-T authorities have made similar investigations in a couple of other leading software companies in Hyderabad and unearthed similar rackets. However, because of the high reputation of these companies, they refused to name the companies.

"We don't want to disclose the names of the companies because of their high reputation and it will spoil the good atmosphere for software industry not only in the city but this whole state. Secondly, the engineers are young and it will spoil their careers once the company's name comes out," the official said. 

Besides, the offence attracts a minimum of three years rigorous imprisonment in addition to a fine, the jobs of the employees are also at risk. The department, however, has penalized both the employees and the companies and has already initiated prosecution proceedings against them.

The department proposes to conduct similar investigations in all the software, pharmaceutical and other companies in the twin cities to stop this kind of activity within the twin cities. "We are going to conduct similar investigation in other major I-T and other companies and see that this is not repeated," he added.

Zia Askari

(CNS)