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PAN Card for HRA Exemption

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Post 2013, for employees earning more than 1 lakh per annum, the landlord’s PAN details need to be provided by the employee in order to avail HRA exemption. When an employee claims HRA without submitting the required documents and the declaration, he/she becomes ineligible for tax exemption and the amount of HRA is included in the individual’s income and the income tax slab is revised accordingly.

The income-tax slab eligible for exemption was reduced from 1.8 lakhs to 1 lakh by the government due to following reasons:

Employees submitting fake receipt in order to avail exemption

Many employees used to submit fake receipt to prove that they are eligible for HRA exemption. This led to many problems, mainly regarding keeping a track of the employees who are actually eligible for HRA exemption.

Landlords’ non-payment of taxes on rental income

Many times, landlords do not pay the taxes on the rental income by not revealing the total amount of rent that they are accruing from a property. If the tenant and the owner provide their PAN card details, this problem could be avoided since the Income Tax Department could trace back the details of their financial transactions.

The new law passed by Government of India states that the employee is required to submit the PAN card declaration form along with the form claiming tax exemption. The PAN card declaration form which is supposed to be submitted by the landlord should have the following details:

  • Certificate of undertaking by the landlord
  • Address of the property
  • Monthly rent paid by the employee
  • Landlord’s PAN card number
  • Landlord’s PAN card number
  • Landlord’s signature
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