There has been an increase in misuse of permanent account number (PAN) for claiming fake House Rent Allowance (HRA) exemption This alarming trend has made many honest taxpayers concerned about the security of their PAN card information and the potential implications of such illegal activity.

In such cases, tax experts say that those who have been affected by HRA fraud will have to prove their PAN has been misused.

For instance, if someone has misused your PAN to claim fake HRA, you will have to prove the misuse before the Income Tax Department if you get any notice in this regard. 

Recently, The Times of India reported that the Income Tax Department has discovered at least 8,000- 10,000 cases of wrong PAN reporting. Some media reports also claimed that the tax department may reopen old cases of mismatch in HRA claims by ITR filers. 

However, the Finance Ministry clarified it would not reopen previous cases. But it “underlined” that the tax department had done e-verification to “alert cases of mismatches of information for FY 2020-21 only without affecting the others’”. (More details here)

Protecting Yourself from HRA Fraud: Essential Tips

If your PAN has been misused by someone, you might receive a notice from the tax department. You will have to reply to the notice by providing more details to the Tax department.

For example, if someone wrongly uses someone else’s PAN to get HRA benefit, the PAN owner can prove they didn’t get any rent. They can do this by showing bank statements with no rent income and a self-sworn affidavit statement saying they don’t own the property.

Also Read: House Rent Allowance calculation with examples for salaried, self-employed for AY 2024-25

To avoid becoming a victim of HRA fraud, you must be alert and aware. Here are some easy steps that you must follow so you can protect yourself.

Cross-check PAN Details: To ensure authenticity, tenants or landlords should verify the PAN details they provide.

Verify Rent Receipts: Carefully analyze rent receipts to ensure they are original and accurately reflect the rent paid.

Report Suspicious Activities: If you come across any suspicious or fraudulent activities involving PAN cards or HRA claims, report them to the relevant authorities immediately.

Keep PAN Secure: Safeguard your PAN card and avoid sharing its details unnecessarily to prevent misuse.

Although the increase in HRA fraud cases is worrying, staying alert and taking precautions can reduce the risk. By staying attentive and reporting suspicious behavior, we can all work together to fight fraud and make our financial world safer for everyone.

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