Accounting and Taxation

House rent Allowance (HRA) is part of maximum personnel' income structures. To avail the HRA exemption, you want to post lease receipts or the hire settlement with the residence proprietor for your enterprise. Quoting the owner's permanent Account variety (PAN) is obligatory if the hire paid is more than Rs 1 lakh yearly, i.e., Rs 8,333 a month, to avail the entire advantage of HRA exemption.

But, it may not be that smooth for every person to assert tax exemption on HRA. This is mainly actual within the case of these who have relocated at some point of a financial year and more youthful employees staying far from home.

Here are 3 eventualities young earners are probable to face at the same time as claiming tax exemption on HRA and the way they could address it:

1.Month-to-month lease is more than Rs 8333 but annual lease paid is much less than Rs 1 lakh. Do you still want to cite landlord's PAN?
Allow us to say you've got been staying with your mother and father and in the center of the economic year you relocate to a exceptional city and start residing on your very own. At this rented lodging, you begin paying extra than Rs 8,333 a month as lease.
"As according to a CBDT (Central Board of Direct Taxes) circular, if annual lease paid with the aid of the employee exceeds Rs 1 lakh according to annum, it is obligatory for the worker to report PAN of the owner to the company. therefore, in this situation, PAN of landlord isn't always required if annual lease does now not exceed Rs 1 lakh."

2. Living in a shared accommodation with buddies if you're living along with your buddies and are splitting the lease, having a certainly described rent settlement will help. For this, get a lease agreement made which has the names of all of the lessees and the amount of lease paid stated in opposition to man or woman names. in the absence of an agreement which suggests the splitting up of rent in reality, a statement from the owner specifying the quantity of lease (i.e., your contribution to the entire lease) you are paying, also can assist.
"to assert the HRA tax exemption, one must have the lease receipts and hire agreement. If someone is residing in a shared lodging, then it is recommended to have the lease agreement with the name of all the buddies living in the lodging, the same is going for lease receipts as well. except, it's far greatest if you pay rent through cheque or internet banking, since it additionally serves as evidence for the fee in the direction of rent,"

3.Process relocation and converting accommodation two times or thrice in one FY Getting your rent receipts monthly rather than inquiring for them collectively on the quit of an FY, allows on this situation. Elaborating on this case"In this case where the employee has paid hire to specific house owners, it's far really useful to have the PAN of all landlords if annual lease exceeds Rs 1 lakh. to claim the HRA, one need to have the hire receipts and hire agreement. As mentioned earlier, paying hire via cheque or on-line banking is usually recommended."
let us say you lived in Delhi for six months of a economic yr and paid Rs 10,000 as month-to-month rent and the other 6 months in Pune at Rs 5,000, the overall rent paid in the financial is Rs 90000 (60,000 + 30,000) which is much less than a lakh, you do not want landlord's PAN.
However, if you've had paid Rs 15,000 monthly rent in Delhi for 6 months, and Rs 10,000 in Pune for the ultimate 6 months of the 12 months, the annual rent paid provides as much as Rs 1.5 lakh (ninety,000 + 60,000). So, if the hire paid exceeds Rs 1 lakh, it would be really helpful to get the PAN of each the landlords.