Mismatch in HRA claims: No drive launched to reopen cases, clarifies CBDT

The Income Tax Department on Monday said it has found mismatch between rent paid by salaried employees vis-a-vis rent received by the recipient for 2020-21 fiscal year and conducted data analysis for high-value cases.

Refuting reports that there is a special drive by the department to reopen cases regarding House Rent Allowance (HRA), the Central Board of Direct Taxes (CBDT) said the verification of rent paid by the tenant and the rent received by the recipient was done in a "small number" of cases.

"Data analysis was carried out in some high-value cases of mismatch between the rent paid by the employee and receipt of rent by the recipient for the FY 2020-21.

This verification was done in a small number of cases without re-opening bulk of cases, especially since Updated Return for FY 2020-21(AY 2021-22) could have been filed by the taxpayers concerned only till 31.03.2024," the CBDT said in a statement.
 

The objective of the e-verification was to alert cases of mismatches of information for FY21 only without affecting others, it added.

The CBDT 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.

HRA forms part of salary income, or CTC, and is calculated in taxable income. However, if an employee lives in a rented accommodation, he/she can claim income tax exemption for HRA received during the year by submitting valid rent receipts.

However, the tax exemption is not available in case taxpayers opt for the new tax regime, which doesn't have exemptions.