How to claim tax exemption on HRA without landlord’s PAN
The process of filing the Income Tax Return (ITR) could be simple and straightforward.
However, at times, certain peculiar and specific situations arise which requires proper solutions to avoid any tax liability in future. Here are few of them and the approach in tackling them.
I am salaried and get HRA as a part of my salary. Currently, I am staying on rent but my landlord is not providing the PAN. How should I claim HRA as the employer is insisting on it?
If you are paying rent of more than Rs 1 lakh an annum but not being able to provide the PAN of the owner to the employer, the HRA benefit will not reflect in the TDS as the employer will not be able to provide any such benefit.
But, the employee may claim the tax benefit on HRA while filing the income tax return (ITR), for which the owner’s PAN, is not mandatory. “In the case of failure, the employer will deny the benefit of HRA while deducting tax on salary income. Having said that, the employee can still claim the benefit of HRA while filing his return of Income,”
However, in doing so, one is likely to get a notice from the tax department due to the mismatch between the ‘salary income’ as per Form 26AS and what is shown in the ITR.
So, be prepared to provide evidence of the rent payment to the tax officer as you are likely to get a notice. Dr. Surana says, “Employee should keep all the documentary evidence such as rent agreement, rent receipt, bank statement for proof of rent payment so as to substantiate HRA claims before the tax officer if the case is selected for scrutiny.”
As per the Rule 26C of the Income Tax Act, it has become mandatory for the employee to furnish certain details to the employer for claiming the tax benefits on salary income. The employee needs to fill and submit Form 12BB to one’s employer, by mentioning the property owner’s name, address and the PAN.
But, at times the employee might fail to obtain the owner’s PAN. “The requirement of furnishing PAN details of Landlord under Rule 26C is only for the purpose of deduction of tax at source on ‘Salary income’ by the employer. There is no change in Section 10(13A) of the Income-tax Act, 1961 which provides for HRA exemption,
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I and my spouse have a joint home loan on a property jointly owned by both of us. We are currently staying in it. How should both of us claim the tax benefit for principal and interest?
It’s common nowadays for both spouses to work and earn independently. While searching for a home loan, the possibility of getting a higher home loan amount increases when both spouses earn. But, would the tax benefits available under the Income Tax Act for the principal and interest payments be allowed to both the spouses? Yes, they can, provided the ownership is also on joint basis. “Where property is owned by the taxpayer and his wife in joint names, having definite and ascertainable shares, and they have paid the interest and principal in respect of the loan jointly availed to acquire the property, then each individual co-owner can claim benefit of interest and principal repayment separately,”
As per the Income Tax Act, the maximum limit for claiming tax benefit on principal and interest payments, on a self-occupied property, have a cap and both the spouses can claim tax benefits. “Each co-owner can claim a deduction of Rs. 2 lakh for interest repayment under section 24 (b) of the Income Tax Act and Rs. 1.5 lakh for principal repayment under Section 80C of the Income Tax Act,”
This means, in total Rs 7 lakh can be used to reduce the total household income and the total household tax saving if both are in the highest income slab, may be about Rs 2.1 lakh.
For tax benefits on a home loan, co-ownership is a must. In case one spouse pitches in and shares the EMI burden, the tax benefit may be lost unless he or she is the co-owner. Say, the ownership is on 50:50 basis and the principal repaid and interest paid during the year is Rs 1.3 lakh and Rs 1.8 lakh respectively, both can claim Rs 65,00 and Rs 90,000 respectively tax benefit.Rs 1.3 lakh and Rs 1.8 lakh respectively, both can claim Rs 65,00 and Rs 90,000 respectively tax benefit.
I have a home loan but staying in a different city on rent because of work. Can I claim tax benefit on the home loan as well the HRA?
Several salaried individuals have a residence in one city while they may be working and staying in a different city. If they are servicing a home loan and simultaneously getting HRA from the employer, claiming tax benefit from both can be tricky at times. “In order to claim the HRA benefit, one of the conditions is that accommodation occupied by a taxpayer is not owned by him and to claim the tax benefit on the home loan, a key condition is that he should be the owner of the house,”
So, if the workplace is far away from one’s own residence, one can claim the HRA as well as tax benefits on the home loan. “Please note that, it would be difficult to claim both the tax benefits in respect of the own house and rented house which are within a commutable distance which is nearby to that of the employment locations.