HRA or House Rent Allowance received as a part of employee’s salary is exempted up to a certain limit as allowed in income tax act 1961. But, very recently, tax department has made it mandatory for all persons to compulsorily submit their house owner’s PAN card details to employer for claiming HRA if employee’s rent paid for the previous year exceeds rupees one lakh.
With this inclusion, every employee paying rent of more than Rs. One lakhs per year has to compulsorily provide PAN details along with the rent receipt and rent agreement to employer.
If employee does not produce landlord’s PAN card details to employer then he or she will not be eligible for HRA exemption.
House owner does not have PAN
If house owner does not have PAN card then employee should obtain a declaration from them stating that he or she does not have PAN or have applied for it.
There is no specific format specified for such declaration, so employee can even obtain it in plain paper from landlord. Following things can be mentioned in such declaration to be on safer side in future;
- House owner’s full name and communication address
- Rented accommodation address
- Whether house owner does not have PAN or Applied for a PAN. If applied then acknowledgement number can be obtained from your house owner.
- Clearly state that the flat or house has been provided to you on rent and house owner is not liable to tax or if any reason for which he has not applied for a PAN
Providing this declaration will full fill the requirements of income tax law and you will be out of trouble in future.
But, if you are not able to provide such declaration from your house owner then HRA will not be allowed to you and employer will be forced to deduct TDS from your HRA.
Declaration or PAN of House owner not submitted
As discussed, if you have not submitted PAN details of house owner or a declaration for not having a PAN card to employer then TDS will be deducted from the whole amount of HRA.
But this is not the end. You can still claim your HRA exemption at the time of filling your income tax return. Keep your rent agreement and rent receipt with you. While filling your tax return just inform the person who is filling or helping you to file for considering your HRA exemption.
At the time of filling your income tax return you will not be asked to produce any document to tax department but keep your rent receipt and rent agreement with you as it may be asked by tax department for verification.
To avoid any future problems in claiming HRA, we have listed down certain suggestions which will help you to claim your HRA exemption;
- Pay your rent either through cheque or bank transfer. Do not pay cash to your house owner as in that case it will be little difficult to prove that you have paid your rent amount.
- Have a rent agreement and get it notarized with a notary. At the time of agreement, get PAN details of your house owners and clearly mention your rent amount per month.
- If you have not collected your house owner’s PAN card details then first drop him a email regarding this so that you will have a proof that you asked for the PAN card copy. You can collect PAN card details of your house owner by using online “Know your PAN card status option” with his name and date of birth if he has been issued PAN by income tax department.
Please let us know your feedback on this. If you require any clarification then please contact us to get it clarified.