You are earning rental income and you don’t know...
- Sidhartha
- TNNUpdated: May 22, 2026, 16:11 IST IST
A few years ago, tax authorities stumbled upon individuals with significant rental income who were not filing returns. Closer scrutiny revealed that a few salaried employees were misusing these individuals’ PANs (Permanent Account Numbers), making false claims of rent payment to secure taxfree House Rent Allowance (HRA).
A limited-period data analytics initiative launched by the tax department revealed that over three years, 28,174 taxpayers had made HRA claims disproportionate to their salaries. When approached by authorities, nearly 4,200 updated their returns, reversing bogus claims worth Rs 217 crore and yielding Rs 120 crore in additional tax revenue. While claiming HRA based on rent paid to relatives (including parents) is perfectly legal, it holds only if the recipient declares that income and pays tax on it.
A limited-period data analytics initiative launched by the tax department revealed that over three years, 28,174 taxpayers had made HRA claims disproportionate to their salaries. When approached by authorities, nearly 4,200 updated their returns, reversing bogus claims worth Rs 217 crore and yielding Rs 120 crore in additional tax revenue. While claiming HRA based on rent paid to relatives (including parents) is perfectly legal, it holds only if the recipient declares that income and pays tax on it.
