For salaried individuals aiming to claim House Rent Allowance (HRA) benefits, a significant compliance requirement exists: if your annual rent exceeds ₹1 lakh, you must provide your landlord's Permanent Account Number (PAN) to your employer. Failure to do so will result in the loss of this valuable tax exemption. Moreover, submitting a false PAN can lead to a tax notice and the forfeiture of the HRA benefit entirely.
The Income Tax Department has recently updated its online Income Tax Return (ITR) utilities for Financial Year 2024-25 (Assessment Year 2025-26), requiring more detailed HRA reporting. While the landlord's PAN might not yet be required directly within the ITR form itself, its submission to the employer for tax deduction at source (TDS) purposes remains critical.
The requirement for a landlord's PAN hinges on the rent amount. Here’s a breakdown of the scenarios:
Annual Rent up to ₹1 lakh (approx. ₹8,333 per month): You are generally not required to provide your landlord’s PAN for HRA exemption.
Annual Rent above ₹1 lakh (above ₹8,333 per month) but up to ₹6 lakh (₹50,000 per month): You must obtain and submit your landlord's PAN to your employer.
Annual Rent above ₹6 lakh (above ₹50,000 per month): In addition to providing the landlord's PAN, you are also obligated to deduct Tax Deducted at Source (TDS) on the house rent.
The underlying reason for requiring the landlord's PAN is to enable the government to cross-verify rental transactions. If you claim HRA benefits, the corresponding rental income should be declared by your landlord for tax purposes, preventing potential income tax evasion.
In situations where a landlord possesses a PAN but refuses to share it, the tenant might unfortunately lose the ability to claim the HRA benefit. However, if the landlord genuinely does not have a PAN, the employee can submit a declaration to their employer, including the landlord's name and address.
HRA tax exemption under Section 10(13A) is specifically available to salaried employees who have an HRA component included in their salary structure. Key conditions for claiming this exemption include:
Salaried Employee: The benefit is exclusive to individuals receiving a salary. Self-employed persons are not eligible for this specific exemption but may qualify under Section 80GG if they pay rent.
HRA as part of Salary: Your salary package or Cost to Company (CTC) must explicitly include an HRA component.
Rented Accommodation: You must be residing in a rented property and actively paying rent. If you live in your own house, you cannot claim HRA exemption.
It's important to note that HRA benefits are available only under the old tax regime. Those opting for the new tax regime will not be able to claim this exemption.
The tax-exempt amount for HRA under Section 10(13A) is the lowest of these three figures:
The actual HRA amount you receive from your employer.
50% of your salary (Basic Salary + Dearness Allowance) if you live in a metro city (Delhi, Mumbai, Kolkata, Chennai), or 40% for non-metro cities.
The actual rent paid minus 10% of your salary (Basic Salary + Dearness Allowance).
Read more: ITR Filing 2025: Why You Should Wait Till June 15, 2025
Understanding the rules surrounding HRA exemption and the mandatory landlord PAN submission is crucial for salaried individuals to maximise their tax savings. The increased vigilance by the Income Tax Department through updated ITR utilities underscores the need for accurate and compliant reporting.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.
Published on: Jun 10, 2025, 1:20 PM IST
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