PAN for HRA exemption

PAN details are required to be submitted at the time of claiming of House Rent Allowance on the filing of Income Tax Return. Not only tenant’s Pan details but also mandated for the landlord to give the PAN detail if rent received them annually is exceeding above Rs 1 Lakh in a year.

What is House Rent Allowance

The house rent allowance is a part of the employee’s salary that is provided as an accommodation cost. The employee is utilizing this portion of salary on their accommodation, the government gives exemption on the amount paid as rent on annual basis. In case the TDS gets deducted, an employee is allowed to claim tax exemption for the HRA amount.

According to the prevailing rules, the HRA exemption can be claimed for the following amounts

  • On the actual HRA received.
  • Balance of rent paid over 10% of the employee’s total salary.
  • Up to 50% of the salary if the employee resides in cities like Mumbai, Kolkata, Mumbai, or Chennai. The percentage is 40% for other cities.

Know about the PAN declaration form

PAN declaration form is a must to attach along with the tax exemption claim form. The PAN declaration form should be printed in A4 size and should include below details with the form

  • An undertaking from the landlord stating his/her name.
  • Residential address
  • Rent paid to landlord detail
  • PAN detail of landlord in case rental income exceeding Rs 100,000
  • Landlord’s name and address
  • PAN declaration form duly signed by the landlord

The eligibility criteria to get tax benefit on HRA exemption

One must understand, only the salaried employees get House to rent Allowance exemption to the salaried individuals. Self-employed professionals are not eligible for the tax benefit on HRA.

What could be the amount of tax exemption?

The amount of deduction available will be the minimum of the following amounts

  • The actual house rent allowance of salary received
  • 50% of the basic salary in addition to the dearness allowance (DA) for employees residing in metropolitan areas and 40% of the same for individuals from non-metropolitan areas
  • Actual rent paid less than 10% of the salary

Required documents

  • Rent receipts
  • Rent agreement with the owner of the house
  • If the rent exceeds Rs.1,00,000 annually the employee should obtain a copy of the landlord’s PAN and submit it to his/her employer

How to claim HRA when living with the parents?

  • If you are showing that you are paying rent to parents, as rental income is taxable to parents. If there is any discrepancy on the rent paid by you and rent received by the parents, in that case, the Income Tax department may charge a heavy penalty, or one can also get a notice from the Income Tax Department of India.
  • If you are showing your parent as a landlord, he or she must be the owner of the house. To save tax, it is a must that the individual is paying rent to the parent in case it is joint property. One needs to make sure that the rent receipt submitted for the HRA exemption should be duly signed by the parents.
  • All the documents submitted to support the rental agreement should be made clear.
  • Parents should also show rent received as a rental income at the time of filing rental income.