Special Drive To Reopen HRA Claims? Income Tax Body Issues Clarification

The income tax has issued a clarification on the speculation surrounding HRA claims. The Central Board of Direct Taxes (CBDT) took to X, formerly Twitter, to debunk claims, that have been made in the public domain.

Taxman Issues Clarification

In the statement issued, the tax body said, "Certain instances of mismatch of information as filed by the taxpayer and as available with the Income Tax Department have come to the notice of the Department as part of its routine exercise of verification of data. In such cases, the Department has alerted the taxpayers to enable them to take corrective action."

In addition, the statement also refuted the discourse that took place online, and added, "However, some posts on social media, as well as articles in the media, have highlighted enquiries initiated by the Central Board of Direct Taxes (CBDT) in cases where employees have made incorrect claims of HRA and rent paid.

The tax body reassured stakeholders and said, "At the outset, it is stated that any apprehensions about retrospective taxation on these matters and re-opening of cases on issues pertaining to HRA claims is completely baseless."

What is HRA?

HRA or House Rent Allowance (HRA) is a system, as a part of which employees are aided by their employers by giving the resources to cover the cost of living in rented accommodation. This is usually part of an individual's CTC. Therefore HRA is taxable, but exemption can be availed through the section 10 (13A) of the Income Tax Act. However, individuals opting for the new tax regime, which is also the default tax regime, will not be able to benefit from the provision.

This is another instance of social media and its ancillary elements creating panic and confusion amongst users, who are also stakeholders or beneficiaries in such cases. Due diligence and sticking to official channels of communication is therefore essential.