Income Tax News: Tenants and landlords both have to stay on the lookout for disparities in rent received and House Rent Allowance (HRA) claims, since the Income Tax department is actively investigating these cases. If a landlord’s PAN is being used improperly for HRA claims, here’s what you should know and do.
When is a Landlord’s PAN Required?
By law, if your annual rent exceeds Rs 1 lakh, you must get your landlord’s PAN and quote it while claiming HRA exemption.
Understanding the Issue
If your tenant misuses you PAN card for falsely claiming HRA, you shouldn’t be held accountable if the tenant improperly uses your PAN to obtain HRA without your permission. However, it’s imperative that issue be resolved right away. Every HRA claim must have corresponding rental income according to tax authorities, and using your PAN improperly can have major repercussions including tax obligations, fines, and even criminal prosecution.
Steps to Take
- Use the income tax website to report how your PAN has been used for HRA claims. Taking action quickly can solve the problem.
- Report the misuse of your PAN for HRA claims in writing by using the income tax website. Taking quick action can help solve the issue successfully.
- To support your claim, collect evidence such utility bills, bank statements, and rental contracts. Having records in place aids in your defence against false HRA allegations.
Preventive Measures for Landlords
- Keep Appropriate Records: Make sure that every rental transaction is properly recorded, ideally via banking channels. In order to demonstrate rental revenue, lease agreements and rent receipts are essential.
- Legal Agreements: In order to authorise the use of your PAN only for tax purposes, sign legal agreements with renters or approved real estate agencies.
- Communication and Updates: Before completing leasing agreements, make sure that all conditions of agreement governing PAN usage are well communicated. Review and amend contracts often to ensure they abide by the law.
For NRI Landlords
- Legal Agreements with Agents: When working with local real estate agents, make sure your agreements include language allowing your PAN to be used only for tax purposes.
- Detailed Records: Keep thorough records of all correspondence, agreements, and transactions pertaining to the rental property, including agreements about the use of PAN cards.
- Quick Action: Report suspected fraudulent activity or PAN card abuse to the appropriate authorities as soon as possible, and take all required legal action to safeguard your rights.