Income Tax (IT) Department is going to be harsh against the people (taxpayers) who claim benefits/tax deductions under the House Rent Allowance (HRA). Reports suggest that following a recent judgement of the Income Tax Appellate Tribunal, the IT department may ask taxpayers to submit more proofs in relation to the HRA deduction and they are genuine tenant.
The case came in light while the ITAT Mumbai was hearing the HRA exemption claim of a salaried individual for rent paid to her mother.
The proof may include rent agreement, electricity or water bill, license agreement among others.
• Several salaried employees submit fake rent receipts signed by their relatives, even after residing in the house of their own or family.
• In case of actual tenants, there are chances where the amount mentioned in the receipt may vary from the actual rent he/she pays to the house owner.
As per a report in a leading newspaper, Sandeep Sehgal, the direct-tax and regulatory at Ashok Maheshwary & Associates, LLP, has said that “the Mumbai Tribunal in its recent judgement clearly spelt that only rent receipts in itself shall not be treated as conclusive document for claiming exemption for HRA and the tax authorities may ask for details to vouch that the claim for rent paid is genuine and reasonable”.
Issuance of PAN number:
The existing tax bracket says that every individual who claims the tax deduction by depositing rent receipts must provide a PAN number of his/her landlord, if he/she pays a rent above Rs 8333 per month. This submission of PAN will allow the tax department to have a look on the landlord that whether he/she has provided the details of income via house rent in his/her tax return.
The case came in light while the ITAT Mumbai was hearing the HRA exemption claim of a salaried individual for rent paid to her mother.
The proof may include rent agreement, electricity or water bill, license agreement among others.
• Several salaried employees submit fake rent receipts signed by their relatives, even after residing in the house of their own or family.
• In case of actual tenants, there are chances where the amount mentioned in the receipt may vary from the actual rent he/she pays to the house owner.
As per a report in a leading newspaper, Sandeep Sehgal, the direct-tax and regulatory at Ashok Maheshwary & Associates, LLP, has said that “the Mumbai Tribunal in its recent judgement clearly spelt that only rent receipts in itself shall not be treated as conclusive document for claiming exemption for HRA and the tax authorities may ask for details to vouch that the claim for rent paid is genuine and reasonable”.
Issuance of PAN number:
The existing tax bracket says that every individual who claims the tax deduction by depositing rent receipts must provide a PAN number of his/her landlord, if he/she pays a rent above Rs 8333 per month. This submission of PAN will allow the tax department to have a look on the landlord that whether he/she has provided the details of income via house rent in his/her tax return.
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