RENT AGREEMENT
This query is : Resolved
07 March 2011
IN WHICH CONDITON HOUSE RENT AGREEMENT NEEDS IN HRA CONTION PROVIDE TO EMPLOYEE WHEN DEDUCTED TDS.
HRA PAID RECEIPTS & HRA AGREEMENT WHEN REQUIRED
HRA PAID RECEIPTS & HRA AGREEMENT WHEN REQUIRED
07 March 2011
Please read the following in the matter of rent receipt and HRA deduction.
"-Expenditure must have been actually incurred - It is necessary for granting the exemption under section 10(13A) that the employee should have actually incurred the expenditure on rent. For purposes of deduction of tax, therefore, the disbursing officer should ensure that the employee concerned has in fact incurred the expenditure on rent. The payment of rent should be verified through rent receipts in the cases of all employees – [Letter : F. No. 12/19/64-IT(A-I), dated 2-1-1967.]
Another circular would be of help too; Production of rent receipts - Only the expenditure actually incurred on payment of rent in respect of residential accommodation occupied by the assessee subject to the limits laid down in rule 2A, qualifies for exemption from income-tax. Thus, house rent allowance granted to an employee who is residing in a house/flat owned by him is not exempt from income-tax. The disbursing authorities should satisfy themselves in this regard by insisting on production of evidence of actual payment of rent before excluding the house rent allowance or any portion thereof from the total income of the employee. Though incurring actual expenditure on payment of rent is a pre-requisite for claiming deduction under section 10(13A), it has been decided as an administrative measure that salaried employees drawing house rent allowance upto3,000 per month will be exempted from production of rent receipt.
It may, however, be noted that this concession is only for the purpose of tax deduction at source, and, in the regular assessment of the employee, the Assessing Officer will be free to make such enquiry as he deems fit for the purpose of satisfying himself that the employee has incurred actual expenditure on payment of rent - [Circular : No. 9/2003, dated 18-11-2003/[Para 5.2-(9)].
There is no hard and fast rules for production of rent agreement for the purpose of income tax deduction. It is left to the satisfaction of the employer to consider the employees claim in the light of the above circulars.
"-Expenditure must have been actually incurred - It is necessary for granting the exemption under section 10(13A) that the employee should have actually incurred the expenditure on rent. For purposes of deduction of tax, therefore, the disbursing officer should ensure that the employee concerned has in fact incurred the expenditure on rent. The payment of rent should be verified through rent receipts in the cases of all employees – [Letter : F. No. 12/19/64-IT(A-I), dated 2-1-1967.]
Another circular would be of help too; Production of rent receipts - Only the expenditure actually incurred on payment of rent in respect of residential accommodation occupied by the assessee subject to the limits laid down in rule 2A, qualifies for exemption from income-tax. Thus, house rent allowance granted to an employee who is residing in a house/flat owned by him is not exempt from income-tax. The disbursing authorities should satisfy themselves in this regard by insisting on production of evidence of actual payment of rent before excluding the house rent allowance or any portion thereof from the total income of the employee. Though incurring actual expenditure on payment of rent is a pre-requisite for claiming deduction under section 10(13A), it has been decided as an administrative measure that salaried employees drawing house rent allowance upto3,000 per month will be exempted from production of rent receipt.
It may, however, be noted that this concession is only for the purpose of tax deduction at source, and, in the regular assessment of the employee, the Assessing Officer will be free to make such enquiry as he deems fit for the purpose of satisfying himself that the employee has incurred actual expenditure on payment of rent - [Circular : No. 9/2003, dated 18-11-2003/[Para 5.2-(9)].
There is no hard and fast rules for production of rent agreement for the purpose of income tax deduction. It is left to the satisfaction of the employer to consider the employees claim in the light of the above circulars.
07 March 2011
SIR RENT PAID IS MORE THAN 6000 P.M. THEN ALL RENT RECEIPTS AND RENTAL AGREEMENT REQUIRED AS PER INCOMT TAX LAW HAS THERE ANY CIRULAR NO
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