Salaried individuals claiming House Rent Allowance (HRA) under the old tax regime will now need to report their relationship with the landlord when renting from family members. This change comes with the Draft Income Tax Rules, 2026, which operationalise the Income Tax Act, 2025, set to replace the 1961 framework from April 1.
If your total rent paid to a landlord exceeds ₹1 lakh per year, you must declare the relationship in Form 124. This includes rent paid to spouses, parents, siblings, or other relatives.
What information must be provided
Salaried taxpayers must provide the following details about their landlord:
✅Name
✅Address
✅PAN (Permanent Account Number)
✅Relationship with the landlord
The purpose is to ensure that HRA claims for rent paid to relatives are genuine and verifiable.
Renting from relatives is still allowed
The rules do not prohibit rent payments to family members. You can continue claiming HRA if the arrangement is real, meaning:
✅ A valid rental agreement exists
✅ Rent is paid through bank transfers, not cash
✅ The landlord declares the rental income in their own tax return
Why this matters
Mandatory disclosure allows tax authorities to cross-verify claims using analytics. For example:
✅ Matching the landlord’s declared income and property ownership
✅ Tracking fund flows via bank channels
✅ Detecting potential fictitious rent arrangements
This makes it easier for authorities to identify irregular claims at scale, rather than relying on manual checks.
Consequences of non-disclosure
Failing to report the relationship can be treated as misreporting of income, especially if the claim is found to be fictitious.
✅ Penalty: Up to 200% of the tax sought to be evaded under Section 439 of the Income Tax Act, 2025
✅ The tenant may receive notices for discrepancies if payments or landlord income are not properly reported
