HRA Claim on Sublet

Tax queries 998 views 1 replies

I have the following query regarding sublet of property. 

A is the owner of the house and has rented the house to B for Rs 10,000 per month. B has further sublet the house to C at Rs 25,000 per month. C is a salaried employee eligible to claim HRA while B is a self-employed professional who is not eligible to claim HRA.

1. While C is claiming HRA, whose PAN card needs to be furnished for the claim by C in ITR?

2. If the PAN card of owner A is furnished, then a difference in the rent paid and rent received of Rs 15,000 is shown which may invite scrutiny.

3. If the PAN card of B is furnished in ITR, then the rent received under Income from House property would not be shown to IT Department as B will show the income as 'Income from other sources', thus, may invite scrutiny. As B is not eligible to claim HRA, how will the PAN card of A gets furnished in the ITR for rent Rs 10,000 paid?

4. In this case, the income to be captured by B would be Rs 15,000?

5. What documents are required by A, B, and C to maintain the legality of the transactions of such nature.

Replies (1)
1. C took the property on rent from B. So C will report PAN of B in investment declaration to employer. C does not have to report PAN of B in ITR

2. NA due to answer in 1

3. In ITR of B, Rent paid will be claimed as expenses where was rent earned will be income from other sources

4. B will capture income of 25000 and expense of 10000

5. Respective agreememts


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