Landlord PAN and HRA Compliance 2025: Updated Thresholds and Practical Alternatives for Rent Invoices
The Income Tax Department has reinforced the requirement for salaried tenants to submit their landlord's PAN details when claiming House Rent Allowance (HRA) exemptions, particularly when annual rent exceeds specific thresholds. Staying compliant with these rules is crucial to retaining tax benefits in 2025.
Understanding the PAN Requirement for Landlords
For the financial year 2024-25 (Assessment Year 2025-26), it is mandatory to provide the landlord's Permanent Account Number (PAN) when the annual rent paid exceeds ₹1,00,000 (translating to roughly ₹8,333 monthly). This rule applies not only during salary computation by the employer but is now explicitly required during income tax return (ITR) filing as well.
The primary rationale behind this rule is to ensure authenticity and transparency in HRA claims. The Income Tax Department cross-verifies the rental income declared by landlords with the tenants’ HRA exemption claims, thus preventing fraudulent rent claims and encouraging landlords to report rental income compliantly.
How to Comply: Rent Agreements and Rent Invoices
To claim HRA exemption effectively, tenants should maintain the following documents:
- Rent Agreement: A duly signed rent agreement mentioning the tenant's and landlord's names, rent amount, rental period, and signatures of both parties.
- Rent Invoices/Receipts: Monthly rent receipts bearing the landlord’s signature and preferably revenue stamp, which serve as proof of payment.
- Payment Proof: Rent payments should ideally be made via bank transfer, cheque, or other traceable modes rather than cash to maintain clear records.
Keep in mind that if the annual rent is ₹1,00,000 or less, PAN submission is not mandatory; however, rent agreements and receipts should still be preserved for documentation purposes.
What If the Landlord Refuses or Lacks a PAN?
If the landlord does not have a PAN, the tenant must obtain a written declaration from the landlord stating the absence of a PAN along with the landlord's name and address. This declaration must be submitted to the employer and income tax authorities. However, if the landlord possesses a PAN but refuses to share it, tenants might not be able to claim the HRA exemption, highlighting the importance of securing PAN details in advance wherever possible.
Additional Compliance for Higher Rent Payments
When rent paid annually exceeds ₹6,00,000 (₹50,000 per month), the tenant also becomes responsible for deducting Tax Deducted at Source (TDS) on rent payments, adding another layer of compliance obligation.
Summary of 2025 HRA PAN Compliance
| Annual Rent Paid | Landlord PAN Requirement | Additional Actions |
|---|
| Up to ₹1,00,000 | Not mandatory | Maintain rent invoices and rent agreement |
| Above ₹1,00,000 to ₹6,00,000 | Mandatory PAN submission | Provide PAN to employer and in ITR; keep rent invoices |
| Above ₹6,00,000 | Mandatory PAN submission | Deduct TDS on rent; provide PAN; maintain documentation |
Tips for Landlords and Tenants
- Always sign a comprehensive rent agreement before tenancy begins.
- Request the landlord’s PAN before making rent payments exceeding ₹1 lakh annually.
- Pay rent through bank transfers or cheques for transparent records.
- Maintain rent invoices monthly as proof of rent payment and for HRA claims.
- Consult tax professionals if you are unsure about PAN submission or TDS deductions.
By adhering to these updated 2025 rules and securing adequate documentation like rent invoices, tenants and landlords can ensure smooth HRA claims and tax compliance without hurdles.