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Dec 17, 2013

New HRA Rule Puts Genuine Taxpayers in Unfair Position

Reshmi V
image The new rule on house rent allowance might help reduce fake claims by salaried employees, however, genuine taxpayers are put on a disadvantageous position. The circular issued by the Central Board of Direct Taxes demands salaried employees to report the PAN of the landlord to the employer if the annual rent paid exceeds Rs. 1 lakh a year. 

More precisely, if the rent paid by the taxpayer is more than Rs. 8333 per month, the assessee should provide additional information about landlord. Earlier the threshold for this condition was Rs. 15,000 per month. The new rule will reduce the fake claims made by assessees who live in their own house.However, landlords will be reluctant to provide PAN to his tenant if he wants to evade tax. 

In such circumstances, genuine tax payers will be in a fix. If the landlord does not have a PAN, then a declaration should be filed by the employee. Under Section 10(13A) of the Income Tax Act, 1961, a salaried taxpayer is eligible to claim house rent allowance exemption.