Income Tax New Rules: A major warning for employed individuals! A major rule has been issued regarding HRA claims..

Claiming HRA (HRA) under the new Income Tax Forms (New Income Tax HRA Rules) will no longer be as easy as before. The government has clarified that to claim rent allowance, you must also disclose 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 on April 1, 2026.

The government has issued draft rules and forms for stakeholders. Based on these, the final rules and forms will be notified next month. The most significant change has been made to the new Form 124.

Under this, if an employee claims HRA (HRA claim rules 2026), they must declare that they have no family or other relationship with the landlord to whom they are paying rent.

What is the relationship with the landlord? Disclosure is mandatory.
Currently, the employee provides details of the estimated rent to their employer. However, disclosure of the relationship with the landlord (landlord relationship disclosure HRA) is not mandatory.

Now the government wants to close this loophole. Tax experts believe this will curb fraudulent or inflated rent claims. Sandeep Jhunjhunwala, partner at Nangia Global Advisors, said,

This provision will help distinguish between genuine and artificial claims. This will increase transparency and make it easier to reject false claims, while not impacting actual procedures.

Tax Credit on Foreign Income Also Tightened
Not only HRA, but also claims for tax credit on foreign income have been tightened. The proposed Form 44 tightens the role and responsibilities of the auditor.

Now, chartered accountants will be required to independently verify the foreign tax deduction certificate, proof of payment, correct exchange rate conversion, and tax treaty eligibility.

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Experts say this rule could pose challenges in cases where consolidated tax statements are issued in foreign countries or where taxes were paid in a different financial year.

The PAN application process for companies has also been tightened. It will now be mandatory to provide a declaration at the time of application that the company does not already have a PAN.

If a PAN exists in the name of a branch, project office, or old entity, internal verification will be necessary to avoid duplication. According to Jhunjhunwala, this will keep the database clean, but also increase accountability. will increase.

New Income Tax Audit Form 26 Changes
Significant changes have also been made to the new Income Tax Audit Form 26. Now, if any adverse comment, disclaimer, or qualification is given in the statutory auditor's report, its impact on income, loss, or book profit must be clearly stated.

For example, if there is an objection regarding revenue recognition, share valuation, or a reduction in provisions, the tax auditor must verify whether this has led to an understatement of taxable income.

Furthermore, the tax audit report must also disclose the accounting software used, cloud or server details, IP address, the country in which the data is stored, and the address of the backup server in India.

Overall, the new Income Tax Form appears to be an attempt to increase transparency and accountability at every level, from HRA to foreign income and audits. While this may increase compliance costs, the government's focus is clear: to crack down on false claims and greater transparency in the system.

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