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Income Tax Tips: Keep these things in mind while claiming HRA, otherwise you may get a notice from the Income Tax Department..

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The Income Tax Department has taken action against employees who claim false House Rent Allowance (HRA). Many such fraud cases have come to light. This means that increased monitoring and verification of details have helped employees claim benefits.

First of all, keep in mind that when HRA is claimed, the transaction should be correct. The transaction should not be only on paper. Along with this, many other things should also be kept in mind. Let us know some things that employees should follow.

No rent receipt
Recent action by the Income Tax authorities has shown that not only people claiming HRA should be alert about the situation. But other people should also know that they can be defrauded.

There are many cases where a person's Permanent Account Number was misused to show that they have received rent from many people. When a person pays rent to another person, the person receiving it has to show it as income.

The matter comes to light when the person whose PAN is used receives a notice from the tax department. Then the person replies that he does not receive any rent because he has not given any property on rent. Therefore, every person should carefully look at every information coming from the tax department and the details related to his income so that he does not fall prey to any fraud.

Correct PAN
While claiming HRA, it is most important that the PAN of the person who is receiving the rent should be mentioned in the details submitted to the employer. This is important because if a wrong PAN is submitted, then verification by the tax department will stop.

The PAN on which the rent is received has to be shown as income. If the number is wrong, then the person who has claimed the benefit may get a notice from the tax department. This can stop the benefit.

Amount claimed
The amount paid as rent has to be shown for HRA calculation. It has to be ensured that the correct amount is claimed as a deduction. In some cases, it has been found that the person claiming HRA has not shown the correct amount. If you do so, you may get a notice from the tax department.

If the rent amount is more than Rs 50,000 per month, then there is also a provision for tax deduction at source. So this also has to be followed. Otherwise, in a hurry to claim more deduction, the person paying the rent may get caught in default.

Making payment
The amount shown in the rent receipt and claimed for HRA benefit has to be paid to the property owner. It cannot be said that the person bringing the rent is a relative or a family member and hence the amount has been adjusted somewhere else. Similarly, this amount should not be paid in cash and it is better to make a bank transfer.

This will make it easier for you to prove that the rent has been paid, in case the tax department asks any questions.

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