V.Swaminathan B.Sc., BL. FCA

CBDT has vide  CIRCULAR NO. 8/2013, Dated: Dated: October 10, 2013 and CIRCULAR NO. 20/2015 DATED 2ND DECEMBER, 2015 said if annual rent paid by the employee exceeds Rs 1,00,000 per annum, it is mandatory for the employee to report PAN of the landlord to the employer. In case the landlord does not have a PAN, a declaration to this effect from the landlord along with  the name and address of the landlord should be filed by the employee.

The circular has rendered life of the salaried taxpayers more miserable, by adding one more requirement fraught with practical difficulties. It is common knowledge that mandating PAN has come to be increasingly resorted to as a tool for keeping a track and monitoring of tax yielding transactions, with the objective of preventing, if not eradicating the evil of tax evasion. Admittedly, however, over the years the Revenue has not at all been successful in enforcing the requirement of PAN so mandated for transactions in relation to among others ‘immovable’. In such a scenario, yet again as a measure of salvation and face saving, the Revenue has decided to pitch on the most soft target of all, being the salaried class. Be that as it may, the subject circular is of the type issued, almost as a ritual, annually; and merely to explain for the benefit of taxpayers the salient features of that year’s Finance Act. As such, the validity of the requirement (s) newly introduced through that circular, in a manner of speaking via backdoor, is highly disputable. For, if at all, that could have been rightly done only through a proper legislation and amendment of the related extant provisions of the IT Act.

By the way, it needs to be incidentally pointed out that, section 194-I providing for TDS on ‘rent’ paid, has in terms application only if the payer is not an individual (or a HUF). On the other hand, the subject HRA is of relevance to employee being an individual. So much so, for meeting the point of objection, in any case, would, if intended to be enforced, call for substantial changes of the related / connected provisions of the law; to give a clue, on the lines of section 206AA.

Further, the said section 194-I , if read mindfully, cannot but be noted to suffer from a like flaw, / fallacy or glaring lacuna as pointed out in a couple of published articles @

Critically analyzed therein, is the yet another provision of a recent origin namely, Sec 194-IA. The lacuna is that house property in the form of unit of a building known as – Flat or Apartment has been omitted to be specially covered by using a proper language as warranted; though for obvious reason not intended.

On the premise that the point made is not without substance but is quite valid, what is deplorable is that for practical purposes both taxpayers and advising professionals, not to speak of the Revenue, appear to have, by and large, over sighted, and continue to do so, without realizing the existence of such a lacuna of a vital nature obtaining for long on the statute book.

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  1. Mahesh says:

    Thanks for the article Sir

    I have some doubts.

    If the owner does not provide PAN should the whole HRA be made taxable, or calculate HRA exemption on an assumption that 1 lakh rent is paid, though rent paid is more than 1 lakh?

    Some persons will be changing houses in one financial year. They would not have given rent to their land lords more than 1 lakh each. But collectively the rent may be more than the mentioned figure. Then from whom PAN is to be collected?


  2. Arpith Jain says:

    Hi Hardik,

    You cannot claim HRA in case you already own a house. Also you cannot enter into rent agreement with your wife as long as you are living together.

    However you can pay rents to your parents/siblings.

    But in any given case you cannot claim HRA if you have a residential property in your name.

    Max you can do is claim interest deduction and also deduction under 80C for repaying loan

  3. Hardik Desai says:


    I co-own a house with my wife in Bangalore and stay in Pune. My wife is a house wife. Can I make rental agreement in my wife’s name and show the rental income as her income. Moreover in such cases can I show rental income as nil for my self.

    Hardik Desai….

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June 2021