This is January and the season where most (or all) of the companies will ask the employees to submit the proof for the investments they make. Im also doing it..
For people who are in rented houses, recently, the Income Tax Department is asking for the owner’s PAN number when the annual rent goes beyond Rs. 1Lakh. Now, with this recent announcement, whom do you think will be affected?? The house owner? WRONG!!! A BIG WRONG!!!.. It is the tenant who is going to be affected.
How? Some of my colleagues’s house owner (including mine), said they wont provide their PAN number. So, we can declare only Rs. 8333 as rent per month that can be claimed as HRA. The rest is GONE!!! We don’t even get a single bedroom house for rent in Bangalore for this amount in a decent locality. Now, we are loosing a big part of our money as tax even though it can be exempted. What will happen next year? The house owners will know that they have to declare the rent as income. They are going to asses how much they are going to pay as tax and add that to the monthly rent. So, it all falls on the tenants.
Already, we are paying tax in our salary and whatever we buy has a tax associated with it. Wherever you go, there is tax. The general feeling seems to be that, most of the people who are supposed to pay tax in crores as escaping without paying anything or paying only a small amount. But, the salaried employees are SCREWED ROYALLY!! The government should do something about it..
Lets not discuss only the problems. Nobody likes to see problems. Somebody has to suggest a solution. So, Suggestions?
Lets find the real issue. So far the house owners collect as much as they want as rent and most of them will not declare this as an income and they will save (black) money. This is a loss to the government. So, government knows that a significant part of an individual’s salary is being spent as rent and they don’t know what happens to the money after it left the individual. So, they want to track the money. How this can be addressed?
- The tenant should be able to declare saying that the owner didn’t provide PAN number. And government can decide how to take this further. If this happens, the owners have to give their PAN numbers. Also, to save the people, the government should decide on the maximum rent that can be collected in a particular area. This amount should match with the amount declared by the people (during their IT submission) staying in that area. If there is a mismatch, it should be enquired immediately. THERE SHOULD NOT BE ANY CORRUPTION IN THIS PROCESS. This will solve only this particular issue.
- If they want to track all the money down, they can ditch the concept of cash completely. ie. There will be no cash transaction anywhere. What they should have is, everybody should get a card using which ALL the transactions can be made. EVEN IF YOU ARE PAYING A BEGGAR ON THE STREET, IT SHOULD BE DONE USING THIS CARD. To get this card, everybody should surrender their cash to the government and get their card loaded with the equivalent amount. THIS WILL DEFINITELY BRING OUT ALL THE BLACK MONEY and government will exactly know what happens to all the money. Obviously, security in these transactions has to be taken care of. Yes.. This will be an expensive activity.. But this is one time expense and the benefit they will get is HUMONGOUS for sure ( I can bet anything on this) !!!
Save the salaried employees!!!