Income Tax New Rules: Big alert for employed people! Big rule came on HRA claim, now this big thing has to be told
Know the main points and gist of the news at a glance
New Delhi Now making HRA claim (New Income Tax HRA Rules) in the new Income Tax Form will not be as easy as before. The government has made it clear that to avail the rent allowance, you will have to declare your relationship with the landlord.
This major change has been proposed in the draft rules and forms issued under the new Income Tax Act, 2025. The new law will come into effect from April 1, 2026.
The government has released draft rules and forms for stakeholders. Based on these, the final rules and forms will be notified next month. The most important change has been made in the new Form 124.
Under this, if an employee claims HRA (HRA claim rules 2026), then he will have to declare that he has no family or other relationship with the landlord to whom he is paying rent.
It is mandatory to tell what is the relationship with the landlord.
At present the arrangement is that the employee gives details of the estimated rent to his employer. But disclosure of relationship with the landlord is not mandatory (landlord relationship disclosure HRA).
Now the government wants to close this loophole. Tax experts believe that this will curb fake or inflated rent claims. Sandeep Jhunjhunwala, partner at Nangia Global Advisors, said,
This provision will help in distinguishing between genuine and artificial claims. This will increase transparency and make it easier to reject false claims, while not impacting the actual systems.”
Tax credit on foreign income also strict
Not only HRA, strictness has also been increased regarding claims of tax credit on foreign income. Both the role and responsibilities of the auditor have been tightened in the proposed Form 44.
Chartered Accountants are now required to independently verify foreign tax deduction certificates, proof of payment, correct exchange rate conversion and tax treaty eligibility.
Experts say this rule can become a challenge in cases where integrated tax statements are issued in foreign countries or the tax is deposited in a different financial year.
The PAN application process for companies has also been made stricter. Now while applying, it will be mandatory to give a declaration that the company does not already have a PAN.
If PAN exists in the name of branch, project office or old entity, internal verification will be necessary to avoid duplication. According to Jhunjhunwala, this will keep the database clean, but the responsibility will also increase.
Also read- Budget 2026: From new date of ITR, late fees to changes in TDS-TCS, complete details in 15 questions for common taxpayers.
New Income Tax Audit Form 26 Changes
Important changes have also been made in the new Income Tax Audit Form 26. Now, if any adverse comment, disclaimer or qualification is given in the report of the statutory auditor, its impact on income, loss or book profit will have to be clearly stated.
For example, if there is an objection regarding revenue recognition, share valuation or shortfall in provision, the tax auditor will have to check whether this has led to understatement of taxable income.
Apart from this, the tax audit report will also have to mention details of the accounting software used, cloud or server, IP address, country in which the data is stored and the address of the backup server in India.
Overall, the new income tax form shows an effort to increase transparency and accountability at every level, from HRA to foreign income and audit. However, this may increase the cost of compliance. But the government's focus is clear on strictness on false claims and more transparency in the system.
Also read- Is the flat-house rent high? 50% tax exemption can be available on HRA; What will be special for the people of Noida-Gurgaon?
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