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How to claim tax exemption on HRA without landlord's PAN

BY SUNIL DHAWAN, ECONOMICTIMES.COM | UPDATED: JUL 14, 2017, 11.47 AM IST Post a Comment

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 The requirement of landlord's PAN under Rule 26C
PAN of the owner to the employer, the HRA benefit will not reflect in the TDS as the is only for the purpose of deduction of tax at source
on 'Salary income' by the employer.
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 Related
(ITR), for which the owner's PAN, is not mandatory. "In the case of failure, the employer Looking to save tax on House Rent
will deny the benefit of HRA while deducting tax on salary income. Having said that, the Allowance? Here's all you need to know
employee can still claim the benefit of HRA while filing his return of Income," says CA (Dr.) What are the tax exemption limits for
Suresh Surana, founder, RSM Astute Consulting Group. allowances, reimbursements paid to
employees? Find out

However, in doing so, one is likely to get a notice from the tax department due to the
Big Change:
mismatch between the 'salary income' as per Form 26AS and what is shown in the ITR. The end of Five-Year Plans: All you need to know

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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, says Dr. Surana.

Click here to calculate HRA

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

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7/14/2017 How to claim tax exemption on HRA without landlord's PAN - The Economic Times

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," says Dr.Surana.

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," says Dr.
Surana.

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," says Dr. Surana.

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. However, a
word of caution from Dr. Surana, "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.

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7/14/2017 How to claim tax exemption on HRA without landlord's PAN - The Economic Times

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