filingmantra partnership

Millennials in the course of better managing the harsh realities of their professional life also have to deal with the day-to-day mundane realities including hustling to arrange for rental deposits whenever you move to a new house, dealing with landlords for timely monthly rent payment, tackling those tedious income tax filing and this list goes endless. Here is a snapshot of a partnership between two start-ups that are looking to solve some of these pain points.

Paymatrix, a leading property rental management platform, was started when these realities of life stuck its founder. Moving to the hustling city of Mumbai, he faced hard realities of arranging money for huge rental deposits; he later found that the credit card which gave him breather often couldn’t be used to pay rental deposits or rent. A deep dive into the same showed that Rent, despite being the largest expenditure ticket is still being transacted in cash with the market characterized by tax evasion, unbalanced bargaining power with landlords, lack of transparency and accountability. A team thus came together to embark upon solving the pain points in the Property rental market with the start-up now offering entire spectrum of Property Rent management solutions from Rental payment management, Rental documentation, Tenant screening, Renters and Landlords Insurance and Rental analytics. One unique aspect of the platform is that it enables individuals to better manage their Rental payments by offering credit from banks and NBFCs through unique scoring mechanism.

Paymatrix, in order to offer better value to its users has been aggressively developing partnerships with established companies and start-ups who are into solving relevant household pain points for users. In this regard, Paymatrix partners with Filing Mantra, a leading income tax return filing service start-up in Hyderabad, who quickly emerged to be a reliable player in helping professionals filing taxes on-time at affordable prices.

filingmantra partnership

As part of this partnership, users of both the companies are entitled to a discount of Rs.100/- on their first order on Paymatrix (https://paymatrix.in/) or Filing Mantra (http://www.filingmantra.com/). All the Filing Mantra users need to do is to enter the coupon code ‘ PAYTAX100 ‘ on the Paymatrix’s website while placing their first order. The coupon code entitles the new users to either avail a discount of Rs.100/- on their Monthly Rent payment or other offerings on the platform. Similarly, Paymatrix users are entitled to a discount of Rs.100/- on Filing Mantra on their Income Tax Filing. This partnership between the two start-ups is set to only scale with both of them planning several co-promotions for their user segments.

washapp partnership

Millennials in the course of better managing the harsh realities of their professional life also have to deal with the day-to-day mundane realities including hustling to arrange for rental deposits whenever you move to a new house, dealing with landlords for timely monthly rent payment, tackling those soiled clothes on a weekly basis and this list goes endless. Here is a snapshot of a partnership between two start-ups that are looking to solve some of these pain points.

Paymatrix, a leading property rental management platform, was started when these realities of life stuck its founder. Moving to the hustling city of Mumbai, he faced hard realities of arranging money for huge rental deposits; he later found that the credit card which gave him breather often couldn’t be used to pay rental deposits or rent. A deep dive into the same showed that Rent, despite being the largest expenditure ticket is still being transacted in cash with the market characterized by tax evasion, unbalanced bargaining power with landlords, lack of transparency and accountability. A team thus came together to embark upon solving the pain points in the Property rental market with the start-up now offering entire spectrum of Property Rent management solutions from Rental payment management, Rental documentation, Tenant screening, Renters and Landlords Insurance and Rental analytics. One unique aspect of the platform is that it enables individuals to better manage their Rental payments by offering credit from banks and NBFCs through unique scoring mechanism.

washapp partnership

Paymatrix, in order to offer better value to its users has been aggressively developing partnerships with established companies and start-ups who are into solving relevant household pain points for users. In this regard, Paymatrix partners with WashApp, a leading laundry service start-up in Hyderabad, who quickly emerged to be a reliable player in helping professionals get their laundry cleaned, ironed and delivered on-time at a click of a button at affordable prices.

As part of this partnership, users of both the companies are entitled to a discount of Rs.100/- on their first order on Paymatrix (https://paymatrix.in/) or WashApp (http://www.getWashApp.in/). All the WashApp users need to do is to enter the coupon code ‘PAYWASH100’ on the Paymatrix’s website while placing their first order. The coupon code entitles the new users to either avail a discount of Rs.100/- on their Monthly Rent payment or other offerings on the platform. Similarly, Paymatrix users are entitled to a discount of Rs.100/- on WashApp on their laundry cleaning orders. This partnership between the two start-ups is set to only scale with both of them planning several co-promotions for their user segments.

tds-on-house

Budget 2017 has brought in certain amendments to the applicability of TDS on Rent and the rates at which TDS on Rent is to be deducted. Prior to this amendment, TDS was required to be deducted by only a specified category of businesses and professionals. However, now even specified categories of salaried employees are required to deduct TDS on Rent.

The following is a brief overview of the TDS on Rent which is required to be deducted by various categories of Taxpayers:

Category A: Professionals and Business falling under scope of Section 44AB

TDS @ 10% is required to be deducted in case the Rent paid/ payable during the Financial Year is more than Rs. 1.8 Lakhs. TDS on Rent in this case is required to be deducted under Section 194I @ 10% of the total amount paid or payable during the year. Moreover, only those categories of businesses /professionals are required to deduct TDS who are required to get their tax audit conducted by a Chartered Accountant under Section 44AB.

Note :

  • The limit of Rs. 1,80,000 p.a. is per taxpayer. So in case, there are 2 co-owners of an asset, this limit would apply for each co-owner i.e. TDS on Rent is liable to be deducted if payment to each co-owner exceeds Rs. 1,80,000 p.a
  • Differential TDS have been prescribed for different types of Assets under Section 194I of the Income Tax Act

TDS for Rent

Category B: Other type of Tenants i.e. Salaried and those not falling in above category

If you are not falling in Category A, then you were earlier exempted from deduction of any TDS on Rent. However, with effect from 1st June 2017 – other tenants (i.e. salaried taxpayers, business and professional not under category A) are also required to deduct TDS if the Rent paid is more than Rs. 50,000 per month. TDS in this case is required to be deducted under Section 194IB @ 5% of the total rent paid or payable.

Note :

  • In order to reduce the burden of compliance, this TDS is not required to be deducted every month and is required to be deducted only once in a financial year
  • The total TDS required to be deducted for the whole financial year is required to be deducted in the last month of the financial year only
  • In case the tenant vacates the property during the year itself – then in such cases TDS @ 5% is required to be deducted in the last month of tenancy
  • Moreover, in order to simplify the process and to reduce the burden of compliance, the tenant shall not be required to obtain TAN No.

TDS on Rent

 

TDS exclusive of Service Tax

Service tax (ST) @ 15% is liable to be paid if the total amount received by your landlord from 1 or more sources during the year exceeds Rs. 10 Lakh (irrespective of whether received as Rent or for providing any other service).

Earlier there was a confusion regarding whether the Tax to be deducted should be computed on Actual Rent or on Total amount of rent including ST. To remove any such confusion – CBDT vide Circular No. 4/2008, dated 28/04/2008 and Circular No. 1/2014 dated 13th Jan 2014 has clarified  that Rent is to be deducted on the amount paid exclusive of Service Tax. Therefore in the above scenario, the Tax on Rent would only be on the Actual Rent paid.

Availability of Tax Credit to the receiver of Rent

The TDS deducted on Rent can be claimed by receiver as credit at the time of filing of income tax return and the receiver would only be required to pay the difference in the tax that was actually payable (computed as per the Income Tax Slab Rates) and the TDS on Rent that has been deducted.

However, if the income tax computed as per the slab rates is less than the TDS deducted, the receiver of rent can request for TDS Refund for the excess TDS deducted.

Form 15G for request for Nil/Lower Deduction of TDS on Rent

Although the threshold for deduction of TDS on Rent has been kept at a higher limit as compared to other limits, there would still be cases wherein Nil Tax is applicable on the person receiving the Rent.

In order to reduce the compliance burden, the Budget 2016 has introduced an amendment stating that if Nil Tax is applicable on the Income of the person receiving the Rent (incl Rental Income), the recipient of such payment can file Form 15G/Form 15H for Non-Deduction of TDS.

TDS on advance rent

In cases where Advance Rent is being paid by the tenant to the landlord, TDS on Advance Rent is also liable to be deducted. However, the income tax department vie Circular No. 5/2001 dated 02-03-2001 has notified that in cases where:

  1. The advance rent is spread over more than 1 financial year, credit of TDS on Rent shall be allowed in the same proportion in which such income is offered for tax based on the single tax credit certificate issued (i.e. Form 16A) for the entire advance rent, or
  2. The asset is sold / transferred by one person to another, credit for the TDS on rent which has not been availed till the date of sale/transfer shall be allowed to the new owner.

Moreover, in some cases advance rent is paid and TDS on Rent is also deducted but later the rent agreement gets cancelled resulting in refund of balance amount to the tenant. In such cases, it has been clarified by the CBDT that the landlord in such cases shall state in his ITR Form that TDS has not been claimed because of cancellation of rent agreement.

Other important points regarding TDS on Rent

  • The Receiver of Rent shall intimate his PAN Card No. to the Party from whom he is receiving the Payment. If the PAN has not been intimated, TDS on Rent shall be liable to be deducted @ 20% under Section 206AA
  • Surcharge is not applicable on TDS on Rent except where payment is made to a foreign company and the amount exceeds Rs. 1 Crore, the Surcharge levied thereon as per the rates in force.
  • No Education Cess or Secondary and Higher Education Cess is to be additionally charged on TDS on Rent.
  • If a non-refundable security deposit is being made by the tenant, TDS would also be liable to be deducted on such non-refundable deposit because such deposit represents the consideration for the use of the asset. However, if the deposit is refundable, no TDS would be deducted on such deposit.
  • If the municipal taxes, ground rent etc are borne by the tenant, no tax would be deducted on such amount.
  • Where payments are made for hotel accommodation taken on regular basis, TDS on Rent payment shall be deducted.
  • The Rent received would be taxed under head House Property and various deductions would also be allowed from the rental income earned.

About Author

Vikas Jain – Chartered Accountant

Vikas Jain is a CA from ICAI, and has experience of over 15+ years with well-known brands in India cutting across different industry segments such as Manufacturing, Service, Pharmaceutical, Power, Infrastructure and Transport.  He commands expertise in Project Financing, Taxation Corporate Accounting, Taxation and  Insurance. He has also served various early stage start-up entrepreneurs with his professional expertise in Company / LLP formation, accounting and compliance management and audits.

To know more you can email him at ca.vkjain1@svrjconsulting.com

RERA

What is RERA

Real Estate sector has been growing over the past few years, but has been unregulated from the perspective of consumer’s protection. This sector has acquired certain disrepute, adversely impacting investment climate and hurting the interests of lakhs of home buyers every year. This Act was passed in the lower and upper houses of the  parliament in 2016, and shall come into force on May 1, 2017 to verify and formulate rules for the functioning of the regulator. According to RERA, each state/UT has its own regulations framed and including the National Capital. This Act enhances the overall transparency, accountability and efficiency in the construction industry. The Central/ State Governments enforced  section 2, sections 20 to 39, sections 41 to 58, sections 71 to 78, and sections 71 to 82 of the RERA Act in May 2016. Certain sections of the Act were not notified then, as the institutional structure weren’t established then, namely the Regulatory Authority and the Appellate Tribunal. The remaining sections of the act came to effect in May 2017. According to the Regulatory Authority and Appellate Tribunal, projects can be sold only after they are registered with the Authority.

Salient Features

Until now home buyers have been facing problems regarding cost escalations, delays in projects, one-side contract terms, arbitrary changes to plan etc. With the execution of this Act:

  • Developers have to register all new projects with “Real Estate Regulatory Authority” before booking, selling or offering new projects.
  • Ongoing projects have to receive completion certificates within a period of three months of commencement of the Act.
  • Developers have to disclose all details about the project on Regulator’s website including:
  • Details of the promoter such as registered address, type of enterprise.
  • Details of the project launched by the promoter whether completed or ongoing in the past five years including current cases, delay in projects, pending payments and details of land type.
  • Proposed facilities and location details are to be provided along with the sanctioned plan, layout plan, specifications of the project and plan of development works.
  • Project status has to be updated at every three month interval.
  • Developers have to deposit 70% of funds received from the buyers in a separate bank account and entitled to withdraw the amount to cover the cost of the project.
  • Developers are subjected to penalty for delay in projects.
  • Developer should sell the projects only based on carpet area where buyers can use. This implies the area covering external walls, service shafts, balcony and open terrace are excluded, but area covered by internal walls are included.

Impact of RERA

RERA has it impact on two key stakeholders i.e. builders and buyers. The act brings in more transparency between the builder and the customer, and ensuring the flow of institutional funds. Moreover, the home buyers are shielded from potentially unscrupulous activities of the builders.

With developers improving the delivery of quality product, contactors have to focus on quality of service, cost and time. The cost of capital for developers is bound to go up as the builders cannot sell the homes before the project approval is complete and that the 70% of the money from the buyers has to be deposited in an escrow account, hence debt is the only way of financing the projects.

New sectors are emerging as major drivers such as e-commerce, logistics and start-ups along with IT and ITES companies in the commercial real estate sector. Investments in infrastructure has also increased in cities such as Hyderabad and Pune with good demand in both MNC’s and start-ups.

RERA will help in boosting the buyers sentiment and the confidence and hence can actually lead to purchase of homes. Hence the act actually brings in regulation but not strangulation. This Act also improved the lending options from lenders and availing finance became easier with reducing litigations.

To sum up with, RERA is a growth oriented act to balance the key priorities of buyer’s interest, investors’ confidence, good governance and to build truest between two major real estate stakeholders: builders and buyers.

Road Ahead

As per CBRE (Commercial Real Estate Services) report Real Estate Sector in India is about to hit $100 billion investments by 2020 from witnessing a $7 billion investment in 2017. As a result of improved investor confidence and better policy reforms, India is one of the fastest growing G-20 economy in the world.

The supply under residential market has jumped by 70% in January – March period with biggest jump in Bangalore, Hyderabad, Pune and Kolkata. Housing sales have risen by 70% with the biggest sales in Hyderabad, Bangalore, Pune and Chennai.

World Development Report of UN states that India stands fourth in developing Asia for FDI inflows and real estate sector in India so far attracted $32 billion private equity.

The GST and Benami Property Act will also have major impact on the real estate business. With the Government moves like demonetization and digital economy, the unorganized and less organized segments of the real estate sector will have to move towards the organised segment or will have the suffer the natural death from the sector.

Indian Real Estate Sector is going to witness a healthy growth and demand in 2017 with credible, reputed and organized players. RERA is going to help builders reorient their methodology and helps real estate sector overcome hurdles it faces and contributes to growth of Indian economy.

Telangana state formation day award 2017

Telangana, the 29th and the newly formed state of India is celebrating its 3rd state formation on 2nd June 2017. A precursor to this celebration is the Telangana government’s tradition of releasing the Annual Report of Information Technology Electronic & Communication (ITE&C) Department lead by the Honourable IT Minister of Telangana Sri K. Taraka Rama Rao ( lovingly called KTR ).  The event also saw the inauguration of T-wallet, the official e-Wallet of Telangana, to encourage digital financial transaction in line with the Government of India in making our country a less cash economy.

The event also saw the recognition of exemplary work done by companies in the field of Information technology and IT enabled services by the Department of ITE&C through the ‘Telangana State Formation Day Award 2017’.  Awards were categorized by the way of contribution in different segments – employment, revenue and exports growth, special services, tier-2 promotions, startups and outstanding achievement award.

Paymatrix was one of the proud awardees of ‘Telangana State Formation Day Award 2017‘ under ‘Best – Women Led Startup’ from the hands of Honourable IT Minister of Telangana Sri K. Taraka Rama Rao in the presence of Honorable IT Secretary Mr. Jayesh Ranjan. This award is a recognition that women can come into the world of startups and lead a change. In this context, we have been also recognized for our efforts in enabling property rental transactions go completely digital and thus enabling the collective vision of achieving a less cash economy. This, we believe also is a recognition of the belief and hard work put by our entire team in realizing this vision.

Telangana state formation day award 2017

The recognition also reaffirms the position of Paymatrix as a leading property rental management platform ,wherein we have registered our highest ever user transaction and user growth over the past quarter. With offerings ranging from credit facilitation for rentals and rent deposits to Renters’ Insurance and Tenant Screening services, we are well poised to assist tenants, landlords and property managers to better manage their property rentals in a convenient and cost effective manner

team Paymatrix Paymatrix Team

 

 

 

 

 

 

 

In this juncture, we also want to mention the IT growth story of Telangana as quoted by Honourable IT Minister of Telangana Sri K. Taraka Rama Rao – The IT exports in 2014 was Rs. 57,000 crores  and the target was to set to double the IT export. The Telangana government is on the track to achieve this target with the registered IT export of  Rs. 85,470 crores with an impressive growth rate of 13.75% in 2016-2017 which is 4% higher than the national growth rate. In fact this once again re-establishes Telangana as the fastest growing state in terms of IT exports.

paymatrix team

NASSCOM Product Conclave (NPC) conducted the fourth edition of #npchyd on 26th May 2017 at the HICC, Hyderabad. The event saw the participation from product start-ups including Paymatrix, small to mid-size companies, VCs/Angels, Leaders and Mentors. It was a blend of keynotes to share knowledge from experts, panel discussions to deliberate the concerns of the industry and workshops to build capacity of the emerging talent.

Team Paymatrix, exhibited their product to various dignitaries who had visited the stall, explaining how Paymatrix is helping the tenants, landlords and property managers in streamlining their rental payments and collections, and how facilitating credit for the rental deposits and rent has helped on time payments of the rents. Audiences were introduced to the new services such as the rental agreement, tenant screening, renter’s insurance, workspace and PG management. The ideas of how we started and how Paymatrix adds value to the tenants and the landlords in the post-discovery phase of the property rentals were much appreciated. More inquisitive questions were asked on the business model, go-to-market strategies, technology, current traction and the future growth trajectory by the NPC Judges.

 

paymatrix team

After much deliberations 5 startups were selected including Paymatrix amongst more than 30 participants for Product Pitch before the VCs/Angels and the Industry Leaders.

paymatrix pitch

Mukesh Chandra Anchuri, Founder and CMO and Anusha Kurupathi Parambil, Co-founder and CEO of Paymatrix represented the Team at the event. Product Pitch of Paymatrix was well received by the audience and the industry with the startup forming some key partnerships at the event.

foundersspark

When Mukesh Chandra Anchuri moved to Mumbai to work with Indian Oil, he had to find a place to rent. And like any one of us would have experienced while renting a place, Anchuri had to pay a huge sum, of around Rs. 3 lakh, as security deposit – something which was difficult to afford or even arrange within a few days. This made Anchuri wonder why one cannot leverage their credit card to pay the security deposit. There was no platform either where one could use their credit card to make rental payments.

He soon realized there was a bigger issue here. Most often, in a bid to evade taxes, landlords ask for payments to be made in cash – be it rent or the security deposit. And almost always, security deposits are a huge amount of money. With the idea of streamlining this process of rental transactions, Anchuri, along with his Indian Oil colleague Anusha Kurupathi Parambil and his classmate Muralidhar Naik from Birla Institute of Technology, Mesra founded Paymatrix in November 2015.

Before actually starting operations, the team researched on around 2800 people to understand the pain points. What came out of the research was that tenants faced an issue of lack of access to credit for big-ticket rental payments. And for landlords, the pain points faced was the lack of a platform to be able to streamline payments received from tenants. Also, most tenants and landlords wanted a proper trail of transactions made.

Taking all of this into account, Anchuri and his team built Paymatrix, a platform that lets tenants pay rent and security deposit with access to credit and lets landlords streamline payments.

How does Paymatrix work?

If you are a tenant, once you register on Paymatrix, you undergo an identity check through KYC (Know Your Customer) process and can start paying rent through Paymatrix electronically. And not just through netbanking and debit cards, tenants can also use their credit cards to make payments. In case the tenant does not have a credit card, Paymatrix offers short term personal loans with an interest rate of around 11-16%. For this, the company has partnered with 4-5 banks and a few NBFCs.

Once the payment is made on the platform, the amount is credited into their account by Paymatrix.

And if you are a landlord, Paymatrix offers a dashboard to manage payments from multiple tenants, set payment reminder alerts and automate payments.

This generates an electronic trail of all transactions made between the landlord and tenants.

Additionally, Paymatrix also offers services of screening tenants and making rental agreements. “We have templates of the agreement online where the landlord has to fill in the required details and that of tenants. They just have to pay the stamp duty online and we get the document franked, authenticated and deliver it to their doorstep,” Anchuri says.

And in states like Karnataka, the startup is working to leverage the e-payment of stamp duty.

Paymatrix Team
Paymatrix team: Co-founders Mukesh Chandra Anchuri, Anusha Kurupathi Parambil and Muralidhar Naik 
Every landlord on its platform can also screen potential tenants. Paymatrix offers a profiling service where a check is run on the tenant in terms of an identity, credit and psychometric analysis. “We charge as low as Rs. 150 per tenant and give a composite overview based on 182 parameters so the landlord knows who they are renting the house to,” co-founder Parambil says.

The company currently has around 4500 tenants and landlords on its platform and has its services in over 10 cities.

For every payment made on credit on Paymatrix, the company earns a convenience fee of 1.5-2.5%. It also earns through the rental agreement service and a subscription fee charged to landlords.

Paymatrix also has B2B model where it provides its services to commercial and co-working spaces. It manages rental payments for its incubator T-hub and manages rental collections for several other property management and real estate players in Hyderabad.

A big boost to Paymatrix has been the government’s move to dis-incentivize cash payments and the recent crackdown on fake rental receipts. Just earlier this month, an Income Tax Appellate Tribunal held that tax exemptions on house rent allowances cannot be given against fake rent receipts. According to a report on the Time of India, an assessing officer can now demand proof — such as leave and license agreement, letter to the housing co-operative society informing about the tenancy, electricity bill, water bill etc. — in allowing a lower taxable income as computed by a salaried employee.

“We are trying to bring all transactions that were once made by cash to an online platform thereby ensuring landlords are accountable for this income. We saw a considerable jump in our business after demonetization. More than tenants, landlords began taking to our platform as tenants were not able to make cash payments,” Naik, CTO says.

But Anchuri and his team recognizes the challenges that are still faced with landlords not wanting to disclose rental income. “Our target audience is very clear when it comes to landlords. We only target those in metro cities, those who hold multiple properties, are well-educated and can access the internet. They should be willing to optimize their tax liability,” Anchuri says.

In fact, Paymatrix also offers integrated tax filing services for rental income received by landlords.

Paymatrix has so far invested around Rs 50 lakhs into the business, which was bootstrapped. It also raised $40,000 funding and is now looking to raise an additional $300,000 for geographical expansion and to hasten up product development. It has also won awards like HYSEA 2017 for early stage consumer startups.

Road to scale

Going forward, Paymatrix wants to become a complete rental analytics player. Using the data points, it wants to be able to even create innovative financial products. For example, Paymatrix is working on a rental insurance scheme for landlords. This composite insurance protects landlords from potential default by a tenant or a mishap in the house. This also created opportunities for its partner banks and NBFCs.

Paymatrix is also looking at building a physical presence in the geographies it operates in, to be able to provide better services, especially to commercial clients.

Operating in a $4-billion market, Paymatrix sees an opportunity to introduce a lot more services. The 14-member team is currently seeing a 27% month-on-month growth and is recovering 70-80% of its operational costs. And with even government policies like the forthcoming Model Tenancy Act and the Benami Property Act working it its favour, Paymatrix hopes to break even within the next year.

Source : http://www.thenewsminute.com/article/how-cool-would-it-be-get-loan-huge-rent-deposits-fintech-startup-s-gamble-rentals-60148

rentallowance-800x333

Now salaried class taxpayers cannot claim house rent allowance or HRA exemption on the basis of fake rent receipts in name of their mother, father, wife or any other close relative. The Income Tax Department may disallow fake HRA exemptions on basis of guidelines recently issued by the Mumbai ITAT (Income Tax Appellate Tribunal). Now onwards, such taxpayers may have to keep other documents to substantiate payment of rent to claim HRA exemption.

HRA exemption

Many salaried class taxpayers claim exemption of house rent allowance (HRA) by furnishing fake rent receipts – in the name of their mother, father, wife or any other close relative – to their employer. Till now, there was no guidance available with the Income Tax Department to deal with such cases and taxpayers firmly believed that only rent receipt was sufficient proof to show genuineness of rental payments. Taxpayers make such sham transactions with the sole intention of claiming HRA exemption in order to reduce tax liability.

 Problems taxpayers can face

Now, salaried class taxpayers which were claiming HRA exemption on the basis of fake rent receipts may find it difficult to claim the exemption. Recently, the Mumbai ITAT issued guidelines for income tax officials to deal with such cases.

In a case, a woman working as senior finance and accounts executive had claimed an HRA exemption of Rs. 7,31,640 for Assessment Years 2009-10 to 2011-12. She also owned a 2 BHK house, jointly owned by her with her husband.

She was showing payment of rent to her mother for residential purposes. She did not produce any evidence except rent receipts to substantiate that there was actual hiring of premises. Her claim was disallowed by the Assessing Officer and the CIT(A).

On further appeal, the Mumbai tribunal disallowed her claim of HRA exemption on the ground that there were no evidences available to substantiate hiring of premises except the rent receipt. The taxpayer could not produce any evidence to substantiate rental payments such as leave and license agreement, letter to society intimating about tenancy, payment through bank, electricity bill and water bill payments etc. It also said “the taxpayer was staying in her own flat with her husband which is emanating from ration card, bank statement and return of income. The mother of assessee also did not file any income-tax return since last six assessment years and said rental income was not brought to tax in the hands of mother of assesse.”

Procedure to follow

You should have evidence of your actual stay at residential house of your mother, father, wife etc. (viz. close relative). You can enter into a rent agreement for this purpose. You may also keep a copy of any other correspondence through email wherein there is consent of your relative to let out the house in your favour.

It is difficult to substantiate rental payments made in cash. So, it’s better to pay house rent to your close relative through transfer of money in his or her bank account.

If you are making rental payments which will be taxable in the hands of your close relative, make sure that he or she files income tax return (ITR) and shows such rental receipts in that return of income.

Married women cannot claim HRA exemption by showing rental payments to their mother when actually living with husband and daughter in another house.

It may happen that the addresses mentioned in your ration card, bank statement and return of income do not match with the recorded address of your rented premises. In that case, you will be in trouble as now the Income Tax Department may scrutinize such cases. Such a probe may indicate that you are living in another house in the same city as you rented premises.

You cannot claim HRA exemption if you have own house in the same city wherein your rented house is situated. It is difficult to prove the necessity of new rental house when you already have one house at your disposal.

You can claim HRA exemption if your rented house is situated in the same city where you work but your own house is outside that city. For example, suppose Mr A is working in Delhi and claiming HRA exemption for rented premises the tax officer cannot disallow such claim if his own house in situated outside Delhi.

You will have to ensure that your rental payments do not exceed the market value of similar property in your vicinity. Suppose you are paying a rent of around Rs. 40,000 for a 1 BHK house in Delhi, it clearly shows that it is a sham transaction. The income tax officer may disallow HRA exemption in such a case.

If you are staying in any flat of society of your relative, make sure to intimate the secretary of society about your tenancy.

If you are claiming tax deduction for EMI of home loan in your income tax return, do not claim exemption of HRA. However, you can claim both the deductions simultaneously if your own house is not in the same city in which you are working and you have taken rented accommodation in the same city where you are working.

GITR

Get in the Ring‘ (GITR) Competition is conducted by Netherlands based ‘Get in the Ring Foundation’ which was established in 2012 to reduce the failure of startups globally by connecting startups to hidden opportunities that are usually missed by entrepreneurs.

The third edition of ‘Get in the Ring‘ happened in Hyderabad which witnessed entrepreneurs battling with their competitors while investors and start-up leaders acted as jury members.A total of 24 start-ups participated in the day-long competition held on 6th April at T-HUB, Hyderabad of which six reached the semifinals for a face-off. The top six were Paymatrix, Authbase, Gayam Motor Works, SpotDraft, ATL, NicheAI.

 

Telangana Today - 07 April 2017 - page 12

 

For further information about the Paymatrix and GITR can be explored by visiting www.paymatrix.in and https://getinthering.co/

The author of the content is a technology and startup enthusiast. For feedback on the content, please write back to us at handfulofwonder@gmail.com