Sunday, August 4, 2019

PAN for HRA Exemption

When filing the Income Tax Return (ITR) the government has provided HRA or Housing Rent Allowance (HRA) as a subset of employee’s salary. It is used to cover the cost of accommodation to a certain extent. This amount is spent by the employee and the government includes this amount under tax exemption. Thus, the employee can claim tax exemption under the HRA exemption.

According to the revised rules in 2013, an employee needs to mention the PAN details o the landlord when filing for tax exemptions under the HRA for amounts exceeding Rs.1, 00,000.

Why is Necessary to Provide PAN for HRA Exemption?

Earlier than 2013, it was not necessary to provide the landlords or owner’s PAN card number if the rent was around 1, 80, 000 per annum or Rs. 15,000/- per month. However, the IT department decided to lower the limit to Rs. 1, 00, 000/- per annum or Rs. 8,333/- per month.

The reason for this change is too many fake receipts were submitted to earn this exemption. Also, the landlords were not paying tax on rental income or did not declare this income in their income tax returns.

So, a salaried individual under the section 10 (13A) of the Income Tax Act gets HRA from their employer, they are eligible for tax exemption. However, to claim this exemption, they need to produce the house rent receipts. Those who pay under Rs. 3000/- per month as rent do not need to produce receipt. This rule is just for administrative ease.

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PAN for HRA exemption



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