Landlord refused to disclose PAN Card?

Recently, we received a query – Regarding payment of rent.

Staying in a rented property I pay the house rent of Rs.14000/month by cash. The house owner having a PAN card clearly denied disclosing it. Now, he wants me to pay the rent in cash and cash only. Working in a company I get a House Rent Allowance to the tune of expenditure incurred on rent. However, the management of the company said the HRA received by me would be taxed as my income. Well I didn’t have any problem in that because I thought that expenditure incurred by me or rent would be available for deduction. That was not the situation, I was getting a deduction of Rs. 8333 per month in lieu of rental expenditure. On questioning the management they told me furnish the PAN Card of the landlord!

There are many people facing the same problem as above. The house owners are not willing to furnish there PAN Card, in this way the tenant is unable to claim any benefit of paying rent. So, instead of the house owner paying the tax [who is actually earning from house rent] the tenant is forced to pay more tax [because they cannot claim the full benefit] and pay rent as well.

The Income Tax Department recently issued a notification regarding the submission of PAN Card of the landlord. The circular clarified, for claiming HRA if the actual annual rent paid as claimed by the employee exceeds Rs 1,00,000 per annum ( or Rs. 8333.33 per month), it is mandatory for the employee to report Landlords PAN. This explains the deduction of Rs. 8,333 being allowed as deduction.

Further this notification, instructed that the employer should insist on production of evidence of actual payment of rent before excluding the House Rent Allowance or any portion thereof from the total income of the employee.

The obvious answer for this would be to deduct TDS on rent payment! But in such case the law does not permit deduction of TDS. According to the Income Tax Act TDS on rent payment is only allowed if the annual rental payment exceeds Rs. 180000, and in the above case it is not so. This creates a problem for many tenants.

Click here to know more about about TDS deduction on Rent.

So, this new rule has increased the unlawful tax burden on the clean tax payers, encouraging the dirty trick played by people generating Black Money. The only remedy that is available to such problems is to “STAY AT SOMEOTHER PLACE” search for an ethical Landlord.

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