Income Tax

Know more about new house rent allowance (HRA) rules

In a recent change in the rent allowance rules for people who pay an annual rent exceeding the limit of Rs.100,000 per annum, would need to submit the PAN number of the landlord to the employer he or she is working with. This change has been brought under House Rent exemption (HRA) under section 10(13 A) of the Income Tax Act. The change has been published in the circular issued by Central Board of Direct Taxes (CBDT).

The need of bringing a change

The aim is to get strict with tax evaders because there would be many who would claim exemption under the above mentioned act without even actually paying a rent. And hence, the tax department realized a need of tightening the noose and ensuring that the identity of the landlord is verified if not through any other mode but at least through PAN details.

There are instances when an employee generates a false receipt since the landlord refuses to give one, and then they make forge signatures to avail tax benefits.

The introduced changes

This precisely means that anyone who is paying a rent exceeding the limit of Rs.8, 333 every month, would have to procure the Pan Card details of their landlord.

The information has been circulated through CBDT vide circular no. 08/2013 F. No. 275/192/2013-IT (B). Till this change was introduced the upper limit for claiming exemption was Rs.15, 000.

The utmost need is to control the tax evasion by all those landlords who never felt the necessity of paying taxes against the income they generate through housing property they own.

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The difficulty faced by the claimant

Those willing to claim for an exemption under this category, may find it difficult to manage their landlord’s Pan number and submit the same to their employer. In spite of being a genuine case, such people may fail to get a deduction under this category.

In the absence of PAN card availability

There could be cases where a landlord may not own a PAN Card, or they might not be willing to share the information about the same, hence there is an alternative to this.

Employees in the above mentioned case must submit the personal details including the name, address and other required details of the landlord to their employers. This detail has to be signed by the landlord himself.

Income Tax Act is meant to ensure that a landlord provides the required details and PAN information for the correct assessment of taxes.
Housing rent is exempted under Income Tax Act, up to a certain limit. However, the Department has come across cases when the claims are made falsely even without a person staying in a rented apartment. Also, the landlords hide the income generated by accepting the rent in cash, without issuing any receipt to the tenant. Therefore, the Department has brought in a string change to ensure the correct return coming from a landlord and also the tenant who could possibly be an employee.

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