Employers required to collect PAN of the lender banks from the employees to claim Interest in House Property in the salary return

The Finance Act, 2015 had introduced a new section 192(2D) of the Income-tax Act, wherein the employer was obliged to collect the necessary evidence or proof in Form 12BB  to allow any claim for any deduction and/or tax saving investments.

One of the requirements in Form 12BB for claiming the interest on house property is to provide the PAN of the lender i.e. the financial institutions, NBFC or others from where the loan is taken, if available. Though the same is not a mandatory requirement in Form 12BB, the same has been made mandatory in the Annexure-II required to be filed in the salary return -From 24Q for the last quarter of the financial year. The same was made effective from 1st June 2016 by the CBDT by way of its Notification No. 30/2016 dated 29 April 2016.

The latest (Return Preparation Utility) RPU version is not allowing the deduction of interest from House Property without the name and PAN of the lender. The same will result in short tax deduction scenario for majority of the employees as the TDS would have already been deducted considering the deduction of interest on house property for all the employees, thereby resulting in interest liability for short deduction for the employers.

Given the above, the due date of depositing the TDS for the March 2017 is till 30 April 2017; as such the employers still have time to collect the PAN of the lender from the employees. In case the PAN is not available, no deduction of interest shall be allowed and the total tax deduction of the employees shall be higher than previously deducted.

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