News: Rent Receipts to be supported by proof for Tax Rebate

Compensation & Benefits

Rent Receipts to be supported by proof for Tax Rebate

A recent ruling by the Income Tax Appellate Tribunal allows the assessing officer to demand proof for rent receipts
Rent Receipts to be supported by proof for Tax Rebate

Working professionals may now be asked to submit proof for their house rent allowance (HRA) rebate claims, as per a media report. The proof could be in the form of the electricity bill, water bill, lease deed etc.   

The ITAT (Income Tax Appellate Tribunal) ruling has now laid down the criteria for the assessing officer to consider the claim of a salaried employee and if necessary question its justification. This will put the onus on the salaried class to follow the rules in availing the tax rebate," Dilip Lakhani, senior tax advisor, Deloitte Haskins & Sells LLP was quoted as saying in the report. 

Clearly, any employee who produces counterfeit rent receipts, would be unable to submit these proofs, and would therefore be liable to pay the tax. It is known to be a common practice of employees to either overstate the rent paid, or to claim that she/he is staying as a tenant at a rented apartment. This ruling could bring these employees under the scanner, and force them to be truthful in their HRA declarations.

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Topics: Compensation & Benefits

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