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Updated on: Dec 13th, 2023
4 min read
Earlier, the government noticed that few employees submitted fake rent receipts to claim the HRA exemption and avoid paying taxes. Also, there are some cases where employees submit fake receipts higher than the actual rent.
If your yearly rent is above ₹1 lakh, you'll need to share your landlord's PAN with your employer. But if your landlord doesn't have a PAN, just provide a written declaration from them confirming this, along with their name and address.
So, by including the landlord’s PAN card details for HRA exemption claims where the total rent paid is more than Rs 1,00,000 per year, the government can ascertain if the employee is actually paying the rent amount mentioned in receipts.
Also, the government has found that some landlords who rent out the properties were not paying tax or declaring the rental income in their tax returns. So, to nudge such landlords, the government has made it mandatory to include the landlord’s PAN details by tenant’s tax returns to verify the landlord’s income.
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 is allowed as a deduction from taxable salary under section 10-13A. HRA exemption is allowed least of the below
For the above calculation, the 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 to claim the HRA exemption. If the payment of rent is more than Rs 1 lakh per annum, then the PAN of the house owner will be required to be submitted. On the basis of these proofs, employers would provide a deduction for HRA in Form 16.
Yes, you can claim HRA without landlord PAN if your annual rent payment is less than Rs 1,00,000. However, it is mandatory to obtain your landlord's PAN when your rent exceeds Rs 1,00,000.
Yes, if your HRA is up to Rs 3,000 per month, you can claim HRA without rent receipts. But, you can not claim HRA without rent receipts when your HRA exceeds Rs 3,000.
Your employer will not allow HRA exemption if you do not submit the landlord’s PAN number or a declaration that he doesn’t have a PAN number. You can directly claim the excess tax deducted on the same while filing the income tax return for the year.
Yes, the rental agreement is mandatory for claiming HRA. However, few employers allow HRA claims without rental agreements.
Rent agreement and rent receipts are required by the employer before the end of the financial year to allow the deduction for the purpose of Form 16.
In case of rent payment per annum is more than Rs 1,00,000 i.e. if your monthly rent is more than Rs. 8333, the employee needs to provide landlord's PAN number to the employer mandatorily.
This tax benefit is only available to salaried individuals who are provided HRA as a part of their salary. Also, they need to be living in rented accommodation and not their own house.
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