Top News

HRA Rule Update: Many employed individuals pay rent to their parents, relatives, or spouses and claim HRA (House Rent Allowance) under the old tax system. However, the draft Income Tax Rules 2026 may now address these issues more closely. If this proposal is implemented, those who rent to relatives and claim HRA will also be required to disclose their relationship to the landlord. The government is making significant changes to the rules governing HRA for salaried individuals.

Major Changes to HRA Rules
According to the draft Income Tax Rules 2026, which are being developed to implement the Income Tax Act 2025, employees will now be required to disclose their relationship to the owner of the house they rent. This new rule could come into effect from April 2026. Previously, employees were only required to provide rent receipts and, if the annual rent exceeded a certain limit, the landlord's PAN. However, now the HRA form will also require information such as "What is the relationship?".

This change may seem minor at first glance, but tax experts say it will particularly impact those who claim HRA by paying rent to parents, in-laws, or other relatives. Until now, if there was a rental agreement, rent was paid through a bank account, and the landlord disclosed the rent in their income tax return, the HRA claim was generally accepted. However, now, including "Relationship" in the HRA form will make it easier for the tax department to quickly track such cases through data analytics.

Benefits of the New Rule
According to the draft rules, the tax department will now be able to easily verify whether the person paying the rent has disclosed this information in their Income Tax Return (ITR) and AIS. Is the house actually in the name of the landlord? Is the rent paid through a bank account or in cash? This means that things that were previously difficult to detect on a large scale can now be detected much more easily with the help of technology. This step has been taken to prevent fraudulent or merely paper rental agreements.

Disclaimer: This content has been sourced and edited from NDTV India. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.