Starting from 1st April, 2026, new amendments in IT rules bring significant changes to House Rent Allowance (HRA) claims. While salaried people can even claim HRA by paying rent to parents, including their father, the rules are now stricter. Assessee must furnish proper documentation and useful proof to justify such claims, providing greater clarity and reducing abuse.
How HRA Rules Were Applied Before
Before April 1, 2026, the process was easier. The employees need to submit Form 12BB to their employer.
They furnished rent receipts and landlord details. The Permanent Account Number (PAN) card of the landlord was required only if the rent exceeded Rs. 1 lakh per year
In various cases, the checking was simple. People can claim HRA by showing rent paid to their father or other family members. Sometimes such arrangements were not real, like no actual money transfer. The system relies on trust and later verification if chosen for scrutiny.
What Changes Have Been Made Now
The new rule starts from the 1st April 2026.
Required Relationship Disclosure
Mentioning the relationship with the landlord is compulsory. If you are paying rent to your father, you need to reveal it. It is crucial if rent surpasses Rs 1 lakh per year.
Crucial Documentation
You should keep:
- Rent agreement
- Bank income proof
- Rent receipts
Your HRA can be denied without appropriate documents.
New Form 124
The Form 12BB is substituted by Form 124. This new form needs more detailed information.
More Information Required
You should furnish:
- PAN of the owner
- Name of landlord
- Address
- Relationship with owner (new requirement)
Valid Income Method
Rent is required to be paid via bank or digital mode. Cash payments may create issues because there is no proof.
Annual Declaration
Now you should furnish these details every year. It is not a one-time process anymore.
Example:
Rahul is a salaried employee. He pays ₹15,000 per month as rent to his father and claims House Rent Allowance (HRA). Earlier, he only submitted rent receipts to his employer, and his claim was accepted without much checking.
Now, after April 1, 2026, Rahul has to do more things. He must clearly mention that the landlord is his father. He also needs to provide his father’s PAN details and make sure rent is paid through bank transfer.
Apart from this, he must keep a proper rental agreement and rent receipts. His father should also show this rental income on his tax return. If any of these things are missing, Rahul’s HRA claim may be rejected.
What Is Permitted When Renting Property from Your Father?
You can still pay rent to your father and claim HRA. It is absolutely legal.
But conditions should be fulfilled:
Step-by-Step Checklist for Claiming HRA
To claim HRA under the new rules, you must follow these steps:
When Issues Can arise
Your HRA claim may be rejected if:
Such cases might be considered as fake or not genuine.
Penalty and Consequences
If provisions are not followed-
Important: How ITR Software Helps Taxpayers Avoid Penalties & Notices
Penalty can vary between 50% to 200% of tax on under-reported income.
Common Mistakes to Prevent
Taxpayers may encounter problems because of small mistakes. Some typical mistakes are-
Such mistakes can lead to the rejection of HRA claims and may result in a penalty.
Effect on Taxpayers
Below we have discussed the major impacts on taxpayers for claiming HRA:-
More Compliance
Now, people should keep accurate records and documents.
Higher Risk
Small mistakes can lead to rejection of the claim.
Need for Coordination
Both the employee and the father should show the same details in their tax returns.
Less Scope for Bogus Claims
It is not easy to claim HRA without real rent payment.
Closure: The same rule does not restrict HRA for rent paid to fathers. It just makes the process stringent. Previously, it was simple to claim. Now, you should prove that it is genuine with accurate documents and clear disclosure.
