Big Change in HRA Rules: Relationship with Landlord May Soon Be Mandatory
If you are claiming House Rent Allowance (HRA) and paying rent to your parents, spouse, or other relatives, you may soon have to clearly mention your relationship with the landlord.
The Central Government has proposed this change under the new Income Tax Act, 2025, which will replace the current 1961 law from April 1, 2026.
What’s the New Rule?
Under the draft rules:
- If your yearly rent exceeds ₹1 lakh, you must disclose your relationship with the landlord.
- You need to provide the landlord’s name, address, and PAN details.
- You must mention whether the landlord is your parent, spouse, sibling, or another relative.
Why This Change?
The government wants to prevent fake rent agreements created just to save tax. With new AI-based systems, tax authorities can now cross-check:
- Whether the landlord has shown rental income in their tax return.
- Whether rent was paid through bank transfer (not cash).
- Whether the landlord actually owns the property.
What If Someone Misreports?
If incorrect details are given or fake claims are made, it could be treated as misreporting of income. Penalties may go up to 200% of the tax avoided, and the return may face scrutiny.
