It will no longer be easy to evade taxes using rent receipts; this confidential information will be required from April 1.

New HRA Claim Rule: Under the new Income Tax Act 2025, the government has issued stricter rules for HRA claims and tax audits. These proposals, which will come into effect from April 1, 2026, will make disclosure of relationships with landlords mandatory, thereby curbing fraudulent rent claims and increasing transparency.

New HRA Claim Rule: The Government of India has released draft rules and forms for the new Income Tax Act, 2025. The main objective of these changes is to prevent tax evasion, bring transparency, and ensure accountability of companies. These new rules will come into effect from April 1, 2026. The government has currently sought suggestions from stakeholders, after which a final notification will be issued next month.

Disclosure of Relationship with Landlord Mandatory

Previously, employees only provided rent information when claiming HRA. However, under the proposed Form 124, they will now be required to disclose whether they have any family or other relationship with the landlord. Experts believe this move will curb fraudulent claims where people submit fake rent receipts in the names of their relatives to evade taxes.

Increased Auditor Responsibility

According to the draft rules, claiming tax credit (FTC) on foreign income will no longer be so easy. Under the proposed Form 44, chartered accountants (CAs) will be required to thoroughly examine foreign tax payments, exchange rates, and tax treaty eligibility (DTAA). This will increase the responsibility and workload of both companies and auditors.

Changes in PAN Application Rules

The process for obtaining a PAN card for companies will now be more stringent. At the time of application, the company will have to provide a clear declaration that it does not already have a PAN. This step has been taken to eliminate the problem of multiple PAN cards being issued in the name of a single company or its branches, ensuring data integrity.

More transparency in tax audit reports

According to the new Tax Audit Form 26, if an auditor finds any discrepancies or omissions in a company's accounts, they must explain the impact of the discrepancy on the company's income or profits. Any manipulation of share valuations or revenue reporting will now have a direct impact on tax calculations.

Information about IT systems and data location will be required

To ensure security and transparency in the digital age, companies will now be required to provide complete information about their accounting software, cloud storage, server IP addresses, and the country in which the data is stored. Specifically, providing the address of backup servers located in India will now be mandatory.