If you are paying rent and getting HRA every month, you are eligible for tax deductions according to the prescribed limit of HRA exemption. If you want to avail of these benefits, you must give the rent receipts to your employer every year at the time of the collection of tax proof.
However, in December, the Central Board of Direct Taxes (CBDT) said those paying more than ~15,000 as HRA every month, or ~1.8 lakh annually, need to furnish a copy of their landlord's permanent account number (PAN), along with the rent receipts. However, Ahmed's house owner is unwilling to provide a copy of his PAN. The requirement, however, is only for those who get HRA of above ~14,999 a year. Many, like Ahmed, have thus been left in the lurch.
If your house owner does not have a PAN, you need not worry, as long as he/she is ready to sign a self declaration stating he does not have a PAN. You can give a copy of this declaration to your employer and avail of the HRA deduction.
As many have realised, the problem arises if the house owner is unwilling to provide a copy of his/her PAN. One would probably have to forgo his/her HRA deduction and claim the refund on a later date, say tax experts. Some of them feel you could furnish a copy of the rent agreement, copies of post-dated cheques to the landlord, bank account statements and a copy of the letter or email you had sent to the landlord asking for a copy of his PAN. However, most disagree.
Employers would not want to risk taking other documents, primarily because there are people who produce fake rent receipts. The primary decision lies with the employer. The company may or may not be willing to take these documents as a substitute for PAN. Typically, they choose to be conservative and stick to the CBDT circular. Human resource heads warn it is unlikely that your human resources department would accept these documents and exempt you from paying tax on HRA in the absence of the landlord's PAN card copy. Officials say no mature organisation would accept these. "No employer will be willing to take a chance by accepting these documents. In case any kind irregularity is found, the company will be held responsible. Most companies will be strict about this norm,.
However, one could claim for a refund at the time of filing income tax returns. One can approach the tax department with a copy of the letter or email, asking for the landlord's PAN and his/her reply or no response and this should be proof that showed the house owner was unwilling to share his PAN card.
But be prepared to wait for at least six months for the refund! So, when your lease runs out next time and you plan to look for another place to rent, make sure you tell your landlord you need a copy of his/her PAN card to claim HRA before you sign the rent agreement and hand the deposit. It will definitely save you the hassles.