Hyderabad: As the financial year 2013-2014 draws to a close, tax returns and exemption filing is gaining momentum for the salaried taxpayers, who are required to file their tax exemption documents before March 31.
This time around, however, many salaried taxpayers are being forced to forgo their house rental allowance tax exemption, as their landlords refuse to reveal their PAN, or a written declaration (in case they do not have PAN card) as per the new I-T norms passed in August 2013.
The circular (8/2013) issued by Central Board of Direct Taxes states that “...an employee claiming exemption from tax with respect to HRA received is now required to report the PAN of the landlord to the employer, if the rent paid by the employee to the landlord exceeds Rs 1 lakh per annum, along with the rent receipt.”
“I pay Rs 10,000 as monthly rent and my landlord demands it in cash. According to the new norms, I have to give the PAN details of the owner. But, he clearly said that he will not give any sort of PAN details nor written declaration. This time I am planning to forgo the HRA tax exemption as I don’t want to go hunting for new house,” said Dharam Singh, an analyst in an investment bank in Hitec City.
Sudheer Allam, a telecom engineer, said “I pay a rent of Rs 14,000 per month since last six months. My landlord is neither willing to provide PAN nor to sign the declaration that he doesn’t have a PAN. If I am not able to give the details, around Rs 20,000 would be deducted from my salary.”
Chandan Dhanani, a tax expert says, “If a landlord does not want to give declaration, then one would probably have to forgo his/her HRA deduction and claim for refund later.
Giving rent receipts is to the satisfaction of the employer. If not, one can file the I-T returns and claim HRA exemption on the basis of rent agreement or proof of payment through cheque or online to the landlord.”
Norm to streamline rental taxes
Hyderabad: The new tax norm issued by Central Board Direct Tax, which mandates the salaried taxpayer to submit PAN and other details of the house owner to avail the HRA exemption, is to streamline the rental taxes, say tax experts.
“Most of the house owners don’t pay the tax on the rentals. But there are many employees who claim for house rental. There is a huge imbalance in the inflow and outflow of the rental tax,” said D. Vijay, a city-based chartered accountant and a professor of the subject.
Earlier, an employee claiming HRA tax exemption had to show only a rent receipt (one every quarter) or a declaration from the house owners. But now it has been made mandatory to submit the PAN or a declaration by the landlord saying that he/she doesn’t have a PAN.
Vijay said, “The department cannot be blamed for the new norm as they are only trying to prevent tax losses. When a tax exemption is given on HRA to an employee, then the department needs to get the same tax from the house owners.”
