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An annual rent of Rs 1,00,000 works out to Rs 8,333 per month – therefore if you are taking a house on rent and making a payment exceeding Rs 8,333 per month – remember to obtain the landlord’s PAN or you may lose out on the HRA exemption.
In case the landlord does not have a PAN they must be willing to give you a declaration. It’s important to do this before you take the place on rent – saves you the hassle of running after your landlord for PAN at the time of tax filing. Do note that salaried employees earning HRA up to Rs 3,000 per month are exempt from the production of rent receipts. Though – we highly recommend you to keep those for your own record. This has been laid down in the CBDT circular no. 8/2013 dated 10th October 2013 as well as in 20/2015 dated 2nd December 2015.
HRA means House rent allowance in income tax. It means the component of salary received towards the rent payment and is allowed as deduction from taxable salary under section 10-13A. HRA exemption is allowed least of the below
For the above calculation, salary would include basic, dearness allowance and fixed percentage of commission.
Documents like rent receipts and rental agreements will be required to be submitted to the employer for claiming deduction for house rent allowance. If the payment of rent is more than Rs 1 lakh per annum, then PAN of the house owner will be required to be submitted. On the basis of these proofs, employers would provide deduction for HRA in form 16.
Rent agreement and rent receipts are required by the employer before the end of the financial year for allowing deduction for the purpose of form 16.
In case of rent payment per annum is more than Rs 1 lakh i.e more than Rs. 8333 per month, the employee needs to provide the PAN number to the employer mandatorily.
