Bogus HRA Exemptions tracked automatically

Bogus HRA Exemptions tracked automatically

-Dr. Lalit Kumar Setia

The statement of annual information tracks the financial dealings of an individual with a PAN number. Like 26AS – Tax Credit Statement, the AIS can be downloaded by logging in to the incometax.gov.in portal.

PAN number relating dealings are tracked automatically

Wherever the bank account is opened, it is a must to mention the PAN number. Whenever any interest be credited in the saving or fixed deposit bank account, it will automatically be tracked in the Annual Information Statement (AIS). An individual has to verify only, at the time of filing the income tax return. Similarly, the income from dividends or income from the sale of sales, everything is connected with an account, opened with the PAN number.

Rental income will automatically be tracked

The employees in the job, require to give the PAN number of the landlord, to whom they are paying the rent. The employer while giving the HRA exemption, requires to insert the PAN number of the landlord to whom the rent is paid by the employee. This information will be included in the Annual Information Statement of the person whose PAN number is provided by the employee and submitted by the employer to the income tax department. The rental income will automatically be mentioned in the pre-filled income tax return of the person whose PAN number is mentioned.

Bogus HRA exemptions will be tracked automatically

Mr. A in Jhajjar Haryana is working in a Government job in Gurgaon. When his drawing and disbursing officer asked him to provide the PAN number of the landlord, for getting exemption on the HRA amount, he submitted the name and PAN number of the landlord.

In case, he is not providing the PAN number of the landlord and the amount of monthly rent paid is above Rs. 8000 (eight thousand) rupees, then the DDO will not give any tax exemption. The rent receipts are required to be submitted to the DDO and even the rent agreement or declaration is required.

The Annual Information Statement of the landlord will intimate him/her that he/she earned from the rental income and he/she has to report the same in the income tax return.

Section 194I is particularly for TDS on rent paid

As per the income tax act, the individuals who are paying monthly rent above Rs. 50 thousand, require to deduct TDS @5% at the time of paying rent to the landlord. The TDS will be deposited by the individual using his PAN number and it will automatically disclose the income of the landlord to the income tax department. In case, the landlord did not report any rental income, he/she will get a notice from the income tax department.

False Rent Paid Declaration may be tracked automatically

It is also possible that the employees mention the PAN number of another person to the employer in the self-declaration. It is also possible that the employees are giving fake rental receipts to the employer. The bogus declaration of the HRA with PAN number will show the rental income in the AIS of a genuine person. The genuine person may submit feedback on AIS citing the amount mentioned in the pre-filled income tax return or AIS is incorrect. In such a case, the false rent paid declaration will be tracked automatically.  

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This content is written by Dr. Lalit Kumar Setia; a renowned author and trainer. He completed his Doctorate in Commerce from Kurukshetra University Kurukshetra and MBA in Information Technology from GJU, Hisar. He also wrote two books, 15 research papers, and organized more than 200 Training Courses during his working period since 2006 in Haryana Institute of Public Administration, Gurugram. The article was published on 23rd December 2021 and last updated on 23rd December 2021. The writer can be contacted on lalitkumarsetia@gmail.com 

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