Friday, May 4, 2012

Landlord Pan mandatory for HRA exemption above 15000/- Rs


on Friday, May 4, 2012

According to the notification issued by the Income tax department, now landlord PAN card is must to get tax exemption against HRA allowance. One will have to submit PAN card as a proof if he is applying for more than 15,000 Rs. as monthly rent which means from now on, he needs to submit original rent receipts as proof of rent as well as PAN card copy of the landlord to get the tax exemption on HRA.

Earlier only rent receipt was required to get the tax exemption but as per the latest notification from Income Tax Department, now one has to submit the PAN details of the landlord. This is mainly due to the increase in the no. of people who are producing false receipts to get the tax exemption.


In the case, if the landlord doesn’t own a PAN card, he must sign the self-declaration saying that he doesn’t have the PAN card and that copy must be submitted to the employer to get the HRA exemption.

See calculator here

CIRCULAR NO. 05/2011 dated 16.08.2011 (right click to save the complete circular in pdf)
Under Section 10(13A) of the Income-tax Act, 1961,any special allowance specifically granted to an assessee by his employer to meet expenditure incurred on payment of rent (by whatever name called) in respect of residential accommodation occupied by the assessee is exempt from Income-tax to the extent as may be prescribed, having regard to the area or place in which such accommodation is situated and other relevant considerations. According to rule 2A of the Income-tax Rules, 1962, the quantum of exemption allowable on account of grant of special allowance to meet expenditure on payment of rent shall be:

(a) The actual amount of such allowance received by the assessee in respect of the relevant period; or

(b) The actual expenditure incurred in payment of rent in excess of 1/10 of the salary due for the relevant period; or

(c) Where such accommodation is situated in Bombay, Calcutta, Delhi or Madras, 50% of the salary due to the employee for the relevant period; or

(d) Where such accommodation is situated in any other places, 40% of the salary due to the employee for the relevant period,

whichever is the least.

For this purpose, "Salary" includes dearness allowance, if the terms of employment so provide, but excludes all other allowances and perquisites.

It has to be noted that only the expenditure actually incurred on payment of rent in respect of residential accommodation occupied by the assessee subject to the limits laid down in Rule 2A, qualifies for exemption from income-tax. Thus, house rent allowance granted to an employee who is residing in a house/flat owned by him is not exempt from income-tax. The disbursing authorities should satisfy themselves in this regard by insisting on production of evidence of actual payment of rent before excluding the House Rent Allowance or any portion thereof from the total income of the employee.

Though incurring actual expenditure on payment of rent is a pre-requisite for claiming deduction under section 10(13A), it has been decided as an administrative measure that salaried employees drawing house rent allowance upto Rs.3000/- per month will be exempted from production of rent receipt. It may, however, be noted that this concession is only for the purpose of tax-deduction at source, and, in the regular assessment of the employee, the Assessing Officer will be free to make such enquiry as he deems fit for the purpose of satisfying himself that the employee has incurred actual expenditure on payment of rent.

check calculator here

Further if annual rent paid by the employee exceeds Rs 1,80,000 per annum, it is mandatory for the employee to report PAN of the landlord to the employer. In case the landlord does not have a PAN, a declaration to this effect from the landlord along with the name and address of the landlord should be filed by the employee.

Update :Landlord's Pan mandatory for payment exceed more than Rs 1,00,000 per annum wef financial year 2013-14

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  1. Good move by Income tax department, so many members create fake HRA document to submit income tax department. If that false they can't submit landlord PAN card...

    ReplyDelete
    Replies
    1. You must be 1 of the beggars from the IT dept.

      Delete
    2. Another beggar from the IT dept..

      Delete
    3. Another beggar from the IT dept...

      Delete
  2. No landlord will accept for this

    ReplyDelete
  3. Anyway instead of fake rent receipts now ppl has to submit fake self-declaration on behalf of the land lord. IT rocks :P

    ReplyDelete
  4. Why penalize a tenant for a landlord unwilling to share his PAN copy

    ReplyDelete
    Replies
    1. take house from landlord who is willing to provide pan

      Delete
  5. What is the limit for FY 2012-13 to submit the PAN card of owner? Is it increased to 200000 ?

    ReplyDelete
    Replies
    1. No limit remain same ie 180000/- for 2012-13 also.

      Delete
  6. Landlord's PAN card copy required? If PAN card number is already mentioned on the Agreement copy.

    ReplyDelete
    Replies
    1. Circular says about reporting of pan number only and doesn't say about photo copy .However DDO can ask for sufficient proofs to satisfy himself

      Delete
  7. Incase of rent/annum >Rs 1,80,000 will giving landlord's PAN lead to TDS for landlord also ?

    ReplyDelete
    Replies
    1. TDS is not deductible by salaried employee even amount is more than 1.8 lakh per annum

      Delete
    2. I wanted to know about if the circle is complete and me giving landlord's PAN lead to auto deduction of tax for him via TDS or the PAN no of landlord is just for documentation purpose as my owner doesnt want to be affected by TDS and reconciliation.

      Kindly advice

      Delete
    3. There is no TDS on rent paid by you to your landlord . It has been made mandatory so that person can not furnish fake receipt to their departments to claim HRA exemption .

      while Providing wrong receipt along with PAN ,land lord also thinks twice

      Delete