Don’t Get Caught Out: India’s New Tax Rules Demand Detail for Deductions This Year
Thank you for reading this post, don't forget to subscribe!Heads up, taxpayers! If you’re planning to claim deductions under the old tax regime for the current financial year (FY 2024-25, Assessment Year 2025-26), particularly House Rent Allowance (HRA), the government is cracking down on inflated or false claims. This year, “pinpoint accuracy” and thorough documentation are non-negotiable.
Wealth planner Anmol Gupta recently cautioned individuals against claiming HRA for a hometown address while working in a different city, highlighting that such claims will face intense scrutiny.
What’s Changed? Mandatory Disclosures for Key Deductions:
The Income Tax Department has introduced stringent disclosure requirements for several common deductions under the old tax regime, including:
- House Rent Allowance (HRA): This is a major focus area. To claim HRA exemption, you must now explicitly provide:
- Your place of work.
- The actual HRA amount you received.
- The actual rent you paid.
- Your basic salary and dearness allowance (DA).
- Whether your city of residence is a metro or non-metro area.
- Crucially, these fields will be cross-verified to catch discrepancies, especially those claiming rent for locations they don’t actually reside in.
- Section 80C (Investments): Beyond just the amount, you’ll need to furnish specific details like policy or document numbers, and the name of the insurer or institution for investments such as PPF, ELSS, and life insurance.
- Section 80D (Health Insurance): Similar to 80C, expect to provide the name of the insurer, policy number, and a breakdown of the premium paid.
- Section 80E (Education Loan): For interest paid on education loans, you’ll need to disclose the loan account number, sanction date, and the outstanding balance.
- Section 80EEB (EV Loan): If you’re claiming deductions for an electric vehicle loan, be prepared to provide the loan account number, sanction date, and outstanding balance.
The Impact on Your ITR Filing:
These disclosures are not optional. As Gupta emphasizes, “Missing information may prevent you from uploading your ITR.” The updated ITR utilities come equipped with automated validation rules, meaning your return simply won’t file unless all mandatory fields are accurately completed.
Important Note: These heightened disclosure requirements apply exclusively to taxpayers choosing the old tax regime.
The Takeaway:
This year, there’s no room for guesswork or casual claims. The government is serious about ensuring transparency and accuracy in tax filings. To avoid potential scrutiny, disallowance of claims, or even rejection of your ITR, it’s vital to:
- Ensure every deduction claimed is legitimate and supported by proper documentation.
- Gather all required details and documents for each deduction before you start filing your ITR.
- Be meticulous in filling out the new, detailed fields in the ITR forms.
Claim smart, and claim only what’s genuinely yours.
