Currently, employees who wish to avail HRA exemption are required to submit the PAN of their landlord(s) to their employer if the aggregate rent payment exceeds Rs 1 lakh in a year. Until FY 2015-16, employers were not required to submit information on landlord PAN to the Income Tax Department. This changed in FY 2016-17. As per the Income Tax Department notification dated 29-Apr-2016 (No. 30/2016), employers will have to report the PAN of the landlord in Annexure II of Form No. 24Q (fourth quarter) from FY 2016-17 onwards.
The Income Tax Department has notified the format of the fourth quarter Form No. 24Q in which employers should enter the following information.
|Column No. 357 – Whether aggregate rent payment exceeds rupees one lakh during previous year||Value “Y” (Yes) or value “N” (No). This is a mandatory field in Form 24Q from FY 2016-17 onwards.|
|Count of PAN of the landlord||Enter the total number of PAN of the landlords. The value in this field should be a positive number (greater than 0) and is mandatory when value “Y” is entered in the previous field (i.e. Whether aggregate rent payment exceeds rupees one lakh during previous year). No value is to be entered under this field in case “N” is the value in the previous field.|
|PAN of landlord 1**||Structurally valid PAN of landlord 1 must be provided, only in case value “Y” is entered for the question, “whether aggregate rent payment exceeds rupees one lakh.” No value is to be entered under this field in case of value “N” (stands for No).|
|Name of landlord 1**||Name of the landlord 1 must be provided. Value for this field is to be provided only in case “PAN of Landlord 1” is entered.|
** There are 4 placeholders available for PAN and name of landlord (PAN of landlord 2 etc.) in Form No. 24Q. This means that PAN and Name details of up to 4 landlords can be provided.
What if landlord does not have PAN?
The Income Tax Department, by way of its salary TDS circular (No. 1/2017) for the financial year 2016-17, states that an employee can submit a No-PAN declaration by the landlord in case the landlord does not have PAN.
Section 5.3.9 in the circular states:
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.
In other words, the revised Form No. 24Q data format which seeks landlord PAN information is in conflict with the above circular.
In case an employee submits a no-PAN declaration, an employer while submitting Form No. 24Q has to answer “N” (stands for No) to the question, “whether aggregate rent payment exceeds rupees one lakh during previous year?” currently. This would of course be misrepresentation of facts to the Income Tax Department. But there is no other option available to an employer.
Employers can enter only a structurally valid PAN in the PAN field. Ideally, the Form No. 24Q should allow employers to submit a value such as “PANNOTAVBL” in case an employee submits a No-PAN declaration. Incidentally, Form No. 24Q allows entry of “PANNOTAVBL” for employee PAN.
Problem with submitting housing loan lender PAN too
There is a similar problem with regard to submitting the PAN of housing loan lender. While Form No. 12BB requires employees to submit the PAN of certain categories of housing loan lenders (such as financial institutions and employer) only if PAN is available, the Form No. 24Q mandatorily requires PAN of the housing loan lender to be entered in case an employee seeks housing loan interest benefit.
Form No. 24Q should allow employers to submit a value such as “PANNOTAVBL” in case an employee submits a No-PAN declaration or if housing-loan lender PAN is not available. Incidentally, Form No. 24Q allows entry of “PANNOTAVBL” for employee PAN.
Employers will start filing the fourth quarter Form No. 24Q for FY 2016-17 in full earnest from 01-Apr-2017. We request the Income Tax Department to notify new data format for Form No. 24Q before April 2017 in order to address the landlord/housing-loan lender PAN issue.
The Income Tax Department has announced that landlord PAN is not mandatory for Form No. 24Q. In a release, the departments has said:
Validation for “PAN of Landlord” field has been revised for form 24Q-Q4 under Annexure II (i.e. Salary details) from F.Y. 2016-17 onwards.
Existing Validation of structurally valid PAN for field no. 41, 43, 45 and 47 has been relaxed. These fields may contain any value from the below mentioned when the landlord does not have PAN.
1 GOVERNMENT: This is applicable when landlords are Government organizations (i.e. Central or State).
2 NONRESDENT: This is applicable when the landlords are Non-Residents.
3 OTHERVALUE: This is applicable when the landlords are other than Government organization and Non-Residents.