🏠 HRA CLAIMS: NEW DISCLOSURE RULE UNDER DRAFT INCOME-TAX RULE 205

 

⚠️ Major compliance tightening for salaried taxpayers claiming House Rent Allowance (HRA).

The Draft Income-tax Rules, 2026 introduce a critical new disclosure requirement that could significantly impact HRA claims—especially when rent is paid to relatives.

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📋 What is the New Requirement?

Under proposed Rule 205 & new Form 124, employees must now disclose:

✅ Landlord’s PAN (existing requirement)
✅ Relationship with the landlord (NEW mandatory disclosure)

This applies particularly where rent is paid to:

• Parents 👨‍👩‍👦
• Spouse
• Relatives
• Related parties

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🔍 Why This Change is Important

The Income Tax Department will now use data analytics to verify:

📊 Whether landlord reported rental income in ITR
🏠 Whether landlord actually owns the property
💳 Whether rent is paid through proper banking channels

This shifts compliance from self-declaration → system-based verification

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⚖️ Risk of Penalty for Incorrect Claims

If HRA claim is found to be artificial or misreported:

🚨 Penalty up to 200% of tax under Section 270A

Earlier, such arrangements were difficult to track. Now scrutiny will be automated.

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✅ Action Points for Taxpayers Claiming HRA to Relatives

To ensure compliance and avoid disputes:

✔️ Execute proper rent agreement
✔️ Pay rent only via bank transfer
✔️ Ensure landlord reports rental income in ITR
✔️ Maintain complete documentation

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🎯 Professional Insight

Genuine HRA claims remain fully valid. However, informal or tax-engineered arrangements will face higher scrutiny.

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📞 For professional guidance on salary structuring and tax planning:
📍 https://share.google/aOzL0ZYXlgKBzSjib
📱 +91 77602 52581

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