Arun Mazumdar (Executive-Accounts&Finance) (58 Points)
09 February 2010Good Morning Friends,
I read some where in a news paper that IT department passed the circular regarding requirement of PAN of a land lord in the Rent Receipts is also mandatory for the purpose of availing deduction?
Please share your knowledge regarding above point ?
Hav a nice day.
Max Payne
(employed)
(2574 Points)
Replied 09 February 2010
No it is not required to be produced as per the best of my knowledge, whether to claim HRA or Expense........ the rules are clearly specified in this regard
The prescribed transactions
3. Initially, some transactions were prescribed for the purpose of quoting of PAN, in cases where transactions were entered into on or after 1-11-1998 or 19-6-2002. With effect from 1-12-2004, five more transactions have been prescribed for this purpose. These transactions are explained in the succeeding paragraphs :
3.1 Transactions entered into on or after 1-11-1998 or 19-6-2002 - The following transactions are prescribed.
3.1a Property deals - Transactions relating to sale or purchase of any immovable property valued at Rs. 5 lakhs or more are specified for this purpose. Apparently, the monetary limit will apply to the value shown in the document for transfer. Since both ‘sale’ and ‘purchase’ are covered, the seller as well as the purchaser must quote his PAN, or must file the declaration in Form No. 60.
3.1b Vehicle deals - Transactions relating to sale or purchase of a motor vehicle or vehicle as defined in section 2(28) of the Motor Vehicles Act, which requires registration by a registering authority under Chapter IV of that Act are next specified for this purpose. However, sale or purchase of any two-wheeled vehicles, inclusive of any detachable side-car having an extra wheel attached to the motor vehicle, are excluded. Thus sale/purchase of scooters, mopeds and the like does not attract the requirement of quoting PAN. Here also, since both ‘sale’ and ‘purchase’ are specified, both the seller and the purchaser must quote his PAN, or file the declaration in Form No. 60.
3.1c Fixed deposits in banks - Transaction involving time deposits (i.e., fixed deposits) in any bank (nationalised banks, scheduled banks, co-operative banks, etc.), are next specified, if the amount involved on each occasion exceeds Rs. 50,000. If a minor having no taxable income desires to open such an account, he must quote PAN of his father or mother or guardian, as the case may be in the document covering the transaction (i.e., application for opening account). If the parent or a guardian does not have a PAN, declaration in Form No. 60 can be filed. However, if the father does not have a PAN but the mother has a PAN, declaration in Form No. 60 cannot be filed. The PAN of the mother must be quoted. The same will apply to cases where the father has a PAN but not the mother. The PAN of the father must be quoted.
3.1d Deposits in post offices - Transactions involving a deposit exceeding Rs. 50,000 in any account with Post Office Savings Bank are next specified. The use of the words ‘any account’ makes it clear that the account may be a savings bank account, or time deposit account. Investment in NSCs, IVPs are, however, not covered, since they are not ‘deposits’ in a Post Office Savings Bank.
3.1e Opening bank accounts - Transactions involving opening an account in any bank (nationalised banks, scheduled banks, co-operative banks, etc.) are next specified. The ‘account’ contemplated here may be a current account, savings account, or overdraft account; time deposits referred to in para 3.1c are not covered.
If a minor having no taxable income desires to open such an account, he must quote PAN of his father or mother or guardian, as the case may be, in the document covering the transaction (i.e., application for opening the account). The position explained in para 3.1c will apply in this case also.
3.1f New telephone connections - Making an application for installation of a telephone connection (including a cellular telephone connection) is next specified.
3.1g Hotel bills - The next item pertains to payment to hotels and restaurants against their bills, if the bills are for amounts exceeding Rs. 25,000 at any one time.
3.1h Share transactions - Transactions involving contracts of a value exceeding Rs. 1 lakh, for sale or purchase of securities are next specified. For this purpose, the term ‘security’ is defined in section 2(h) of the Securities Contracts (Regulation) Act, which reads as follows :
“ ‘Securities’ include—
(i) Shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate;
(ia) Derivative;
(ib) Units or any other instrument issued by any collective investment scheme to the investors in such schemes;
(ic) Security receipt as defined in clause (zg) of section 2 of the Securitisation & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002;
(id) Units or any other instrument issued to the investors under any mutual fund scheme;
(ii) Government securities;
(iia) Such other instruments as may be declared by the Central Government to be securities; and
(iii) Rights or interest in securities.”
3.1i Cash payments to banks - The following items are prescribed :—
(i) Payments in cash for purchase of bank drafts or pay orders or banker’s cheques from a banking company, for an amount aggregating Rs. 50,000 or more during any one day.
(ii) Deposit in cash aggregating Rs. 50,000 or more with any banking company during any one day.
3.1j Cash payments for foreign travel - Payment in cash in connection with travel to any foreign country, of an amount exceeding Rs. 25,000 at any one time, has also been prescribed. For this purpose, ‘payment in cash in connection with travel’ includes payment in cash towards fare, or to a travel agent or a tour operator, or for the purchase of foreign currency. The expression ‘travel to any foreign country’ does not include travel to the following countries :—
(a)
(b)
(c)
3.2 Transactions entered into on or after 1-12-2004 - The following transactions have been prescribed by the Income-tax (17th Amendment) Rules, 2004:
3.2a Application for issue of a credit card - If a person makes an application to any bank, or to any banking institution, or to any other company or institution, for issue of a credit card, the said person must quote his PAN in the application for issue of such credit card.
3.2b Purchase of units of mutual funds - If a person applies to any mutual fund for purchase of its units for an amount of Rs. 50,000 or more, the person must quote his PAN in the relevant application made to the mutual fund. [This requirement, it may be noted, will apply only for investment in units, and not for investment in a mutual fund for any other purpose.]
3.2c Acquisition of shares in companies - If a person pays Rs. 50,000 or more to a company for acquiring shares issued by it, the person must quote his PAN in the relevant application. It must be noted that the payment must be to a company directly, and such a contingency will arise only in respect of initial public issues and issue of right shares. Where payment is made for acquiring shares through a stock broker, and from shareholder, the transaction will not fall under this category.
3.2d Acquisition of debentures/bonds - If a person pays Rs. 50,000 or more to a company or an institution for acquiring debentures or bonds issued by such company or institution, the person must quote his PAN in the relevant application.
3.2e Acquisition of RBI bonds - If a person pays Rs. 50,000 or more to the Reserve Bank of
Filing of declaration by persons having no PAN
4. Under the second proviso to rule 114B, as substituted by the Income-tax (17th Amendment) Rules, 2004 with effect from 1-12-2004, any person who does not have a PAN and who enters into any transaction explained in para 3 shall make a declaration in Form No. 60 giving therein the particulars of such transaction. This requirement can apply only to the persons who are not mandatorily required to obtain a PAN. Anyway, this proviso stresses the important fact that none of the transactions explained in para 3 can be entered into without quoting the PAN or filing declaration in Form No. 60.
Persons having agricultural income
5. Under rule 114C(1)(a), the provisions of section 139A shall not apply to the persons who have agricultural income and are not in receipt of any other income chargeable to income-tax. Hence, such persons are not mandatorily required to obtain a PAN. However, under the proviso to the said provision, such persons are required to make a declaration in Form No. 61 in respect of transactions explained in para 3.
Non-residents
6. Under rule 114C(1)(b), the provisions of section 139A shall not apply to the non-residents referred to in section 2(30) [i.e. a person who is not a ‘resident’]. Therefore, non-residents are not mandatorily required to obtain a pan. They need not file any declaration also in respect of transactions explained in para 3.
Government transactions
7. Under rule 114C(1)(c), the provisions of section 139A shall not apply to transactions where Central Government, State Governments and Consular Offices are the payers.
Responsibility of the other party
8. Under sub-rule (2) of rule 114C, the person who has received any document relating to a transaction explained in para 3 [refer para 8.1 for details] is required to ensure that PAN is quoted in the document concerned, and also verify that PAN quoted is correct. A photostat copy of PAN may be insisted upon for verification.
SOURCE
https://law.incometaxindia.gov.in/DitTaxmann/IncomeTaxActs/2005ITAct/Appendix2.htm
Amir
(Learner)
(4016 Points)
Replied 09 February 2010
G.K. Bhai
U have pasted entire provisions of PAN, not bad..........
Dear Arun, even I also endorse what bro G.K. has mentioned but just want to add what one of the circular has clarified that "Rent receipts may be the only document required for claiming HRA exemption for TDS purposes, but during the time of assessment AO can call for any record to satisfy himself about the genuinity of payment of rent."
Max Payne
(employed)
(2574 Points)
Replied 09 February 2010
Amir bhai... i pasted so that the full info is available to convince... Hee hee... :))
But to my credit, those were fantastic colours applied towards the end using MS word.... :))
But PAN, how can AO demand PAN?? Its not requried to be quoted...! :P
I mean its ok i guess if he asked for rent agreement, but PAN to establish identity is too much no..?..
:))
Amir
(Learner)
(4016 Points)
Replied 09 February 2010
G.K. Bhai
Just because of this reason, I didn't write anything from my side on that circular....:) I mean I leave it exactly what it says without trying to elaborate it...
Even I also feel that calling for PAN of Landlord will be too much.......
!!!!But u never know !!!
PRAVEEN KUMAR
(MBA (Finance) B.Com.(P))
(3443 Points)
Replied 09 February 2010
It is not mandatory to provide PAN of landlord.
Ranjeet Singh
(Senior Manager -Finance (North Region))
(22 Points)
Replied 18 January 2012
As per the Circular No. 05/2011 dated 16.08.2011 by Department of Revenue, Central Board of Direct Taxes, Ministry of Finance, Government of India (page no. 24):
“If annual rent paid by the employee exceeds INR 1,80,000 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.”
CAclubindia
