Income Tax exemption: Nidhi Sinha has a week to submit her investment declaration, which is necessary to save income tax on her salary. This time the accounts department of the IT firm, where she works as a software engineer, has asked her to furnish the PAN number of the owner of the house she has rented if she wants exemption on her house rent allowance (HRA).
Nidhi was paying Rs 10,000 as rent but she was never asked to furnish the house owner’s PAN number while filing her IT declaration. Earlier, only taxpayers paying Rs 1.80 lakh or more annually as rent had to mention the PAN number of the house owner. This year, the limit has been revised to Rs 1 lakh bringing Nidhi under the provision.
The change is a part of the many amendments incorporated by the Central Board of Direct taxes (CBDT) through Budget 2013-14 announcement, notifications and circulars in the current financial year.
While taxpayers are mostly aware that they can claim deductions up to Rs 1 lakh through investments under LIC, PF, PPF, tuition fee and housing loan, among others, they should keep in mind the small but important changes while tax planning and submitting their declarations each year.
Living as tenant
For salaried individuals, one of the most common exemption sought is HRA. If living in a rented house, taxpayers are required to submit rent receipt from landlords to claim the exemption. In 2012-13, an assessee paying rent less than Rs 15,000 per month did not have to submit Permanent Account Number (PAN) details of the landlord along with the rent receipt for claiming exemption.
However, the income tax department, in its drive to tighten the leash on tax evaders, last month amended the rule. So, now, instead of Rs 15,000 per month, assessees paying a rent of Rs 8,333 a month or Rs 1 lakh yearly will have to submit the PAN of their landlords along with the rent receipts.
This seemingly-small change may prove to be a challenge for a much larger number of assessees as in many cases, landlords may be unwilling to give out the PAN details.
If the landlord does not have a PAN, the assessee has to submit a declaration to this effect along with name and address of the landlord.
First-time home buyers
Tax assesees, who are buying their first house, are entitled to a deduction of up to Rs