Furnish PAN of landlord for claiming HRA

If you are paying rent and getting HRA allowance every month, you are eligible for tax deductions according to the prescribed limit of HRA exemption. If you want to avail of the benefits, you must submit the rent receipts to your employer every year at the time of the collection of tax proof. Central Board of Direct Taxes (CBDT) has vide CIRCULAR NO. 05/2011, DATED 16-8-2011 said those paying more than Rs 15,000 as HRA every month, or Rs 1.8 lakh annually, need to furnish a copy of their landlord’s permanent account number (PAN), along with the rent receipts.In case the landlord does not have a PAN, a declaration to this effect from the landlord along with the name and address of the landlord should be filed by the employee.


EXTRACT FROM THE CIRCULAR NO. 05/2011 [F.NO. 275/192/2011-IT(B)], DATED 16-8-2011 RELATED TO HRA
Under Section 10(13A) of the Income-tax Act, 1961,any special allowance specifically granted to an assessee by his employer to meet expenditure incurred on payment of rent(by whatever name called) in respect of residential accommodation occupied by the assessee is exempt from Income-tax to the extent as may be prescribed, having regard to the area or place in which such accommodation is situated and other relevant considerations. According to rule 2A of the Income-tax Rules, 1962, the quantum of exemption allowable on account of grant of special allowance to meet expenditure on payment of rent shall be:
(a) The actual amount of such allowance received by the assessee in respect of the relevant period; or
(b) The actual expenditure incurred in payment of rent in excess of 1/10 of the salary due for the relevant period; or
(c) Where such accommodation is situated in Bombay, Calcutta, Delhi or Madras, 50% of the salary due to the employee for the relevant period; or
(d) Where such accommodation is situated in any other places, 40% of the salary due to theemployee for the relevant period,
whichever is the least.
For this purpose, “Salary” includes dearness allowance, if the terms of employment so provide, but excludes all other allowances and perquisites.
It has to be noted that only the expenditure actually incurred on payment of rent in respect of residential accommodation occupied by the assessee subject to the limits laid down in Rule 2A, qualifies for exemption from income-tax. Thus, house rent allowance granted to an employee who is residing in a house/flat owned by him is not exempt from income-tax. The disbursing authorities should satisfy themselves in this regard by insisting on production of evidence of actual payment of rent before excluding the House Rent Allowance or any portion thereof from the total income of theemployee.
Though incurring actual expenditure on payment of rent is a pre-requisite for claiming deduction under section 10(13A), it has been decided as an administrative measure that salaried employees drawing house rent allowance upto Rs.3000/- per month will be exempted from production of rent receipt. It may, however, be noted that this concession is only for the purpose of tax-deduction at source, and, in the regular assessment of the employee, the Assessing Officer will be free to make such enquiry as he deems fit for the purpose of satisfying himself that the employee has incurred actual expenditure on payment of rent.
Further if annual rent paid by the employee exceeds Rs 1,80,000 per annum, it is mandatory for theemployee to report PAN of the landlord to the employer. In case the landlord does not have a PAN, a declaration to this effect from the landlord along with the name and address of the landlord should be filed by the employee.






With regards,
Bipul Kumar
FEMA & Tax Advisory Services
Wisdom Management Consultancy Private Limited
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