Tenants suffer even as landlords dodge taxes

As per the official records, average tax payment made by an individual salaried taxpayer was Rs 76,306 in assessment year 2016-17.

Some financial policies of the present government are being seen as unfriendly to the “middle-salaried class”, especially for tenants.

The latest advisory that was issued by the Ministry of Finance, in which it has cautioned salaried tax payers for under-reporting their income or inflating their deductions while filing their IT returns, has come as a salt on a wound to the salaried class which ironically pays more tax than a businessman. As per the official records, the average tax payment made by an individual salaried taxpayer was Rs 76,306 in assessment year 2016-17, as against only Rs 25,753 by an individual business taxpayer. The latest advisory, issued by the Finance Ministry, has for the first time asked the salaried class to give a break-up of the salary component and the deductions, together with income earned from house property while filing their returns. Officials said that this was being done to check tax evasion by the salaried employees. As per the advisory, taxpayers will have to give details about allowances that are not exempt, value of perquisites, profit in lieu of salary and deductions claimed under Section 16.

At present, most of the calculations used to arrive at the taxable income are part of the Form-16 issued by the employer.

“The honest salaried tax payer is being continuously harassed. The Finance Minister, when he was in the Opposition, had said that if they come to power, the salaried class will have to pay no taxes for an annual income of Rs 5 lakh. However, that has now proven to be a hollow talk. If they really have to stop tax evasion why are not they making the house owners and the tenants to declare their PAN card details while accepting rent and giving rent? Are they not aware that no house owner declares his PAN card while accepting rents despite charging such high rents since then they would have to pay tax on that rent? It is the people who have multiple houses, and who give them on rent, who are evading taxes. People like us have no ways to evade tax even if we wanted to,” an income tax assistant, who pays Rs 14000 as rent for a two-room flat in Paschim Vihar in the national capital, said. As per rules, where the annual rent paid is more than Rs 100,000 per annum, it is mandatory to report the PAN of the landlord to the IT Department to claim HRA exemption and in case the landlord does not have a PAN, one must obtain a declaration to this effect from the landlord with name and address of the landlord.

Officials said that making the PAN mandatory for house owners while accepting rent was being resisted by bureaucrats across the spectrum as many of them have multiple houses which they have given on rent.

“The house I am living in belongs to a recently retired bureaucrat. He is taking Rs 25,000 from me but I cannot claim tax exemption on it as the rent is transferred to his son’s account. When I asked him for a PAN card he point blank refused and said that I should look for a new house. In many cases, tenants like me give half of the amount in cash and half is transferred through online banking,” asked an executive in a marketing firm, who lives in Dwarka sector 10.