Investments management

As per the Income-Tax Act, if the rent paid during a financial year (April 1 to March 31) exceeds Rs 120,000, then the tax is required to be deducted at source at applicable rates. However, an individual is liable to deduct the tax at source only if he is carrying on a business or profession, subject to certain conditions. As you are a salaried individual, you are not liable to deduct tax at source on the rent. As this is a residential house property and will be used for residential purposes, no service tax should be charged. Stamp duty laws vary from state to state, therefore, please check with your local stamp duty consultant. Tax authorities may ask for the lease deed, rent receipts, your bank statements to verify the payment of the tax. They may also ask for the landlord’s PAN. Besides, generally, the employers also ask for these documents before giving exemption to an employee for the HRA.