To claim HRA exemption, report landlords PAN if annual rent exceeds Rs 1 lakh

Written by Suresh Surana | Updated: Oct 29 2013, 16:39pm hrs
Recently, I earned capital gain on sale of a plot of land I had held for over 10 years. I wish to reinvest this in a residential house to avoid capital gains tax. However, I will continue to stay with my parents in their house and let out the new one. I do not own any other house property. Can I claim tax exemption even if I let out the new house

Navneet Malhotra

Section 54F provides exemption from capital gains tax if the long-term capital gain (as you have held for more than 36 months, i.e., three years) is invested in a residential house property. This Section merely requires purchase/construction of a residential property within the specified time limit and does not put any condition regarding its utilisation. Thus, you will be eligible to claim exemption benefit under Section 54F even if the new house is let out.

I am a salaried employee working with a private limited company. Recently, I was informed that I will have to provide the Permanent Account Number (PAN) of my landlord to claim HRA exemption this year. My understanding is that the landlords PAN has to be furnished only if the annual rent payment exceeds R2 lakh. In my case, the annual rent is only R1.2 lakh...

Gaurav Sharma

As per a circular issued by the income-tax department on October 10, 2013, to claim HRA exemption, an employee is mandatorily required to report PAN of his landlord to the employer if the annual rent payment exceeds R1 lakh. Note that the limit of R2 lakh was relevant for FY13. Thus, you will be required to furnish PAN of your landlord to the employer to claim HRA exemption. If your landlord does not have a PAN, you need to take a declaration from him, stating that he does not have a PAN and furnish, along with such a declaration, the name and address of the landlord to the employer.

In 2009, I spent R5.5 lakh on renovation of my house. I need to sell this house now. Can I claim deduction of renovation expenses, besides the cost of the house, while calculating capital gain

Pranay Shah

The renovation carried out by you on your house is in the nature of capital expenditure. You can claim deduction for such expenses as cost of improvement of the house while calculating income taxable under the head capital gain. Since the house has been held for more than 36 months, it would be treated as long-term capital asset. In such a case, the benefit of indexation will also be available on the cost of improvement from the year in which such costs were incurred.

I work as a management consultant in an IT company and receive fees after deduction of TDS at 10%. How can I obtain a lower deduction certificate for financial year 2013-14 as a considerable TDS amount was withheld in the last financial year and had to be claimed as refund.

Rohit Kumar

You can apply for obtaining lower/nil deduction certificate from the income-tax department as per the provisions of Section 197 of the Income Tax Act. In this respect, an application has to be made in Form No13, along with relevant details (such as details of last three years returned income/assessed income, tax payment and estimated income of the relevant year) to the jurisdictional assessing officer (AO). The AO, after verifying the genuineness of the case, may issue a certificate for deduction of tax at a lower rate or for non-deduction of tax. Such certificate remains valid for the period as specified in the certificate, until it is cancelled by the AO.

The writer is founder of RSM Astute Consulting Group

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