HRA Claim: If a tenant uses the PAN of another landlord to claim HRA, both the tenant and the landlord may have to face tax authorities.
New Delhi. If you also work and are engaged in different tricks for tax saving every year, then you need to be careful now. The Income Tax Department is identifying and sending notices to such people who are claiming their House Rent Allowance (HRA) fraudulently.
As per the law, if the annual rent exceeds Rs 1 lakh in a financial year, tenants will have to obtain the PAN of the landlord and include it while claiming house rent allowance. However, landlords sometimes do not share their PAN. If a tenant uses the PAN of another landlord to claim HRA, both the tenant and the landlord may face issues with the tax authorities.
ET quoted S Vasudevan, an executive partner at Lakshmikumaran & Sreedharan (LKS) Attorneys, as saying that the tax department has received several cases where taxpayers (employees) have falsely claimed HRA exemption by fraudulently paying rent to landlords.
Legal Obligations to Landlord
Lawyers say that if a landlord can prove that they did not know that their PAN was used by an unauthorized person, then they will not have to face legal problems. Sanket Jain, partner, Pioneer Legal, explains that if someone uses your PAN without your permission to claim HRA, you should not be held responsible. However, you should act quickly to solve the problem. You can challenge any false claim made with your PAN and demand investigation.
Landlords may get notice
Ramakrishnan Srinivasan, former chief commissioner of income tax, said, “In my experience, I have seen instances where landlords have received notices from the department for alleged rent when their PAN was misused to claim HRA. It takes a lot of effort for landlords to deny tax liability and it is a lengthy process to prove that they have not received the alleged rent.
Tenants and landlords face problems
Experts have warned that both the person and the landlord can get into trouble with the Income Tax Department if they misuse the landlord’s PAN to claim HRA. This is because the relevant rental income must be reported for tax purposes in every HRA claim.
How to avoid misuse of PAN
- Review your tax information: Regularly check your TIS and AIS for any errors or unauthorized claims related to House Rent Allowance.
- File a complaint: File a complaint regarding misuse of PAN officially through the Income Portal.
- Collect documents: Collect evidence to support your claim, such as rent agreement, utility bill, bank statement, or any other document that shows your property details and rental income.
