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You are here: Home > Collections > Tax Evasion

Income Tax department puts HRA exemption under scanner


Babar Zaidi, ET Bureau Oct 21, 2013, 04.37PM IST

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Tags: Vineet Agarwal

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KPMG

Income Tax

HRA

Direct Tax

C entral Board of Direct Taxes

NEW DELHI: As if the additional information required in tax returns was not enough, there's more bad news for tax evaders. Salaried taxpayers who claim HRA exemption will now have to report their landlord's PAN if the total rent in a year exceeds Rs 1 lakh. "In case the landlord does not have a PAN, he must submit a declaration to this effect from the landlord along with the name and address of the landlord should be filed by the employee," says a circular issued by the Central Board of Direct Taxes last week.
(Salaried taxpayers who)

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Till now, if the total rent paid was less than Rs 15,000 a month, there was no need to submit the landlord's PAN details. The new rule effectively reduces this limit to Rs 8,333 a month. This is being seen as an attempt to plug tax evasion by salaried professionals who submit fake rent receipts to maximize their HRA exemption. But even honest taxpayers will have to suffer the collateral damage. "This will create problems for many employees as landlords are generally reluctant to provide PAN on rent receipt to tenants," says Vineet Agarwal, director KPMG. The CBDT circular has also sounded another warning. Under section 10(13A), salaried employees who get HRA up to Rs 3,000 per month are not required to produce rent receipts. "This concession is only for the purpose of tax-deduction at source, and, in the regular assessment of the employee, the Assessing Officer will be free to make such enquiry as he deems fit for the purpose of satisfying himself that the employee has incurred actual expenditure on payment of rent," the circular clarifies. Gross direct tax collections between April and September 2013 touched Rs 3.01 lakh crore, a rise of 10.7 per cent over the Rs 2.72 lakh crore collected in the corresponding period of the previous fiscal. But the government had fixed a 19 per cent growth target for direct tax collection. In the first six months of the fiscal, barely 45 per cent of the total direct tax collection target of Rs 6.72 lakh crore has been achieved.

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Readers' opinions (292)


Sort by: Newest | Oldest syam (RR dist) 14 Nov, 2013 06:54 PM

The salaried employee is paying more than what he is getting on HRA. In case of the employees who are residing in govt a no question of HRA. That means what he is getting is what is losing. There is no loss for him. Most of the senior govt serva accommodation. That is why they are not worrying about the others. pavankumar (bangalore) 12 Nov, 2013 04:38 PM

As the rentals in Cities are going up, so should the HRA exemption. Instead, decreasing the allowance will make one vuln employees) further exploited. Employees will become scapegoats of House owners as House owners will be reluctant to the use of HRA exemption when it is not meeting it's purpose. sunny.creations (DEL) 11 Nov, 2013 02:08 PM

This is freaking communist. The govt. doesn't give a darn to what a common man would have to face because of such min These decisions are completely biased, they target only salaried people because the can't get bribes directly from us. easily continue with their extortion from businessmen, if they put such rubbish policies for businessmen who will give brib Neha Joshi (Delhi) 11 Nov, 2013 12:12 PM

From when is this rule applicable? There is no such circular available on the CBDT website. Can anyone please suggest, rule is applicable from this FY 2013 - 2014 or not? Rocky (India) 06 Nov, 2013 08:06 PM These Politicians are beggar. Salaried people needs to feed them daily.

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