ITR submitting: Claiming HRA to reduce tax outgo? Rent receipts alone may not suffice – why your claim can be rejected

House Rent Allowance (HRA) stays a standard tax-saving profit for salaried people. But latest scrutiny by tax officers reveals that even properly-documented claims can be rejected if the underlying transactions seem doubtful or fail to present a transparent cash path.To claim HRA exemption below Section 10(13A) of the Income Tax Act, salaried people should obtain an HRA element of their wage and submit related paperwork—resembling lease receipts, agreements, and landlord particulars—to their employer, in accordance to an ET report. While these are not required when submitting the Income Tax Return (ITR), authorities can name for them throughout scrutiny.The exemption is calculated because the minimal of:

However, consultants warning that correct paperwork alone does not assure approval.The Income Tax Department has flagged a number of circumstances the place lease was paid to shut members of the family—resembling a partner or father or mother—elevating doubts in regards to the legitimacy of the association.“In order to claim HRA tax exemption, employees must provide proofs like rent receipts, a rental agreement, and, in some cases, landlord details like PAN if rent exceeds Rs 1 lakh annually,” mentioned Suresh Surana, founding father of RSM India, quoted in an ET report. “Even with proper documentation, disputes may arise if the tax authorities find discrepancies or non-compliance with legal provisions.”One case cited by Tax2Win concerned a salaried worker who submitted lease receipts and an settlement to present lease funds to his spouse. The claim was disallowed as a result of the spouse had no different revenue supply, and the transaction was deemed non-real.In one other occasion, a taxpayer claimed Rs 2.52 lakh as HRA for lease paid to her mom. The lease was paid in money and backed by hand-written receipts. But tax officers discovered that the taxpayer collectively owned a self-occupied flat close by, claimed housing mortgage deductions on it, and listed the flat as her deal with throughout PAN, financial institution data, and her ITR. Her mom had not declared rental revenue and failed to reply to notices. The ITAT ultimately dominated that all the association was a sham and disallowed the claim.Quoting the tribunal’s discovering, Surana mentioned: “Rent receipts alone are not sufficient. The taxpayer bears the onus of substantiating the genuineness of the claim through documentation, conduct, and a verifiable financial trail.”Tax consultants say lease paid in money, with out matching financial institution withdrawals, can be a pink flag. Discrepancies between lease-associated paperwork and Form 16, Form 26AS, or the Annual Information Statement (AIS) additionally enhance the probability of rejection.“If rent is shown to be paid to a close relative without an actual monetary transfer, it could be disallowed,” Abhishek Soni, co-founding father of Tax2Win instructed ET. “To avoid rejection, taxpayers should maintain a valid rent agreement, PAN of the landlord, proof of rent payment through banking channels, and address proof of the rental property.”Other pink flags embrace inflated lease quantities, use of generic or duplicate receipts, and inconsistencies in deal with throughout paperwork. Claims made whereas proudly owning a self-occupied house in the identical metropolis can additionally invite questions, particularly with out a affordable clarification for renting.“The AO is empowered to seek clarifications and reject the exemption if supporting evidence appears unreliable,” Surana added. “Salaried taxpayers must ensure their claims are backed by credible financial transaction—not just paperwork.”