Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: VAT Audit :: ARTICLES ON INPUT TAX CREDIT IN VAT :: list of goods taxed at 4% :: form 3cd :: ACCOUNTING STANDARD :: VAT RATES :: empanelment :: TDS :: cpt :: articles on VAT and GST in India :: TAX RATES - GOODS TAXABLE @ 4% :: Central Excise rule to resale the machines to a new company :: due date for vat payment :: ACCOUNTING STANDARDS :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes
 
 
Direct Tax »
 Hopeful of meeting direct tax collection target for this financial year: CBDT
 Bengaluru tops in income tax probes after demonetisation
 Income Tax department rejects black money disclosures of over Rs 2 lakh crore
 CBDT urges people to protect bank accounts from 'unscrupulous elements'
 No change in gold seizure norms in proposed I-T Law amendments
 Direct tax collection will get a long-term boost, Franklin Templeton says
 I-T Act amendments upset calculations of cash hoarders
 Claim tax benefit on costs incurred to evict tenants
 The Integrated Goods And Services Tax Act, 2016
 Here’s what Income Tax Department did leading up to demonetisation
 I-T department asks IDS declarants to pay tax by November 30

Ensure your house owner will furnish a PAN
November, 22nd 2013

Software developer Ashu Chawla pays Rs 30,000 towards, but has been able to claim house rent allowance (HRA) exemptions only half the amount of Rs 15,000. Chawla, who has been staying a rented apartment for over two years now, has received an acknowledgment from her landlady for the amount she pay's through cheque. But Chawla has been hit by a huge tax-deduction from her employer, and hence is now planning moving to another rental apartment, she says.

Ashu's is not an isolated example. Many individuals staying in rented apartments could be faced by higher tax-deductions as the IT department. A recent circular issued last month by the Central Board of Direct Taxes (CBDT) has mandated that tenants will have to produce their landlord's Permanent Account Number (PAN) for HRA exemptions of Rs 1 lakh or more annually, which works out to a rent of Rs 8,333 or more monthly. In other words, if you are paying a rent of more than Rs 8,333 per month, you must furnish the PAN details of your landlord to your employee.

Two years back, the Board had issued a similar circular asking taxpayers to produce a rent agreement or PAN card of the landlord if the monthly rent exceeded Rs 15,000 a month, or Rs 1.80 lakh or more annually. With the recent circular, the CBDT has further tightened the norms for deductions at source, which will affect rent payers even below the Rs 1 lakh per annum bracket.

The CBDT circular says that if a tenant is not able to produce his/her landlord's PAN, he/she must submit a declaration to this effect from the landlord along with the name and address of the landlord at the time of claiming HRA exemption. It should be signed by the landlord, with a valid identity proof such as passport details, ration card or voter's card. A copy of the declaration should be given to the tenant.

However, there could be cases where the landlord refuses to help with PAN details or a declaration. “In that case, an employer may reject the HRA claim due to lack of documentation as mentioned in the circular,” says Amarpal Singh Chadha, tax partner at EY. That is, an employee will have to forego the HRA benefit. This circular is issued for employers, who are not suppose to provide the HRA benefit without getting the documents asked for.

Further, landlords will also have to keep an account of the payments received. Sometimes, family members pay rent to their parents. Now such landlords need to be more careful. Payment of HRA can be traced through their spouse or parent's PAN numbers. As a result, taxes will have to be paid on such rentals by the recipient, depending on the Income Tax slab in which the landlord comes under.

If the document is not furnished before the due dates for filing proofs on tax-saving investments, that is, February 2013, the HRA benefits may be withdrawn, because there are no alternatives provided in the circular if the documents are not provided. Hence, it will make sense to rent a place where the landlord is open to providing documents.

However, the Income Tax Act has no amendment to this effect, says Gautam Nayak, partner at Contractor, Nayak & Kishnadwala Chartered Accountant. "Because, the law or the Income Tax Act does not prohibit anyone from getting HRA benefits in the absence of landlord's details," he says. Hence, circular does not specifically say the employee's HRA cannot be honoured in the absence of such documentation.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Careers

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions