Can You Claim Tax Exemption On HRA Without Landlord's PAN?

By Olga
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    While gearing up to fill in our investment proof submission forms, we look for ways to reduce our TDS burden. There are several cases where the landlord refuses to give you his PAN to avoid tax. If you are a salaried individual with HRA benefits, paying an annual rent of 1 lakh or above, you are required to submit your landlord's PAN to your employers in the rent receipts. Your HRA benefit will not be reflected in your TDS if your employer does not receive it.

    Can You Claim Tax Exemption On HRA Without Landlord's PAN?

    What to do if you cannot get your landlord's PAN?

    You can claim the tax benefit on HRA while filing your Income Tax Returns for which the house owner's PAN is not mandatory.

    However, you are likely to receive a notice from the IT department asking for an explanation in the mismatch between 'salary income' as per Form 26AS (Annual Consolidated Tax Statement) and as per the ITR.

    In case of such scrutiny, to substantiate the claims, one should be prepared with:

    • Rental agreement
    • Rent receipt
    • Bank statement showing rental payment

    Can you claim tax exemption on HRA if you live with your parents/spouse/children?

    You can legally claim rent payments made to your children or parents but not your spouse. They have to be the legal owners of the house, and you need to submit proof of payments which could be in the form of bank transfer payments and rent receipts.

    Can you claim tax benefits on principal and interest on house loans paid mutually by you and your spouse?

    Yes, you can if the house is jointly owned by the two of you. Each of you co-owners can claim a deduction of Rs. 2 lakh for interest repayment under section 24 (b) of the IT Act and Rs. 1.5 lakh for principal repayment under Section 80C.

    The tax benefit cannot be availed by both, if only one spouse has the ownership of the house.

    Can I submit fake rent receipts?

    Submitting fake receipts is a common practice among employees as proof since we know that these usually stay with the employers unless they have been asked by the IT Department in case of scrutiny.

    In case you are renting a house where the owner only accepts payment in cash and does not agree to give you his PAN, you might be feel compelled to submit fake receipts. And going back to our question, no it is not right as there is a risk of inquiry from the IT department. The best thing to do is report a case against your landlord on cash payment, or you could claim it during ITR as mentioned above in case of bank payments.

    Ideally, you must always discuss the rental payment procedures with the landlord before you sign the rental agreement.

    In what cases do IT Department inquiry take place?

    • If the individual has claimed for exemption on house loan as well as HRA. (Note that if you live in a different city outside commutable distance for job purposes and live in a rented home while paying a home loan in your hometown on a house owned by you, you can claim for tax exemption)
    • If the rent receipts mention a higher amount than what one actually pays.
    • If the individual lives with parents/children and claims to pay rent without actually doing so.

    Read more about: hra tax exemption india
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