FALSE HRA CLAIMS UNDER SCRUTINY OF INCOME TAX DEPARTMENT
The Income Tax Department has launched one of its biggest verification drives against fake HRA (House Rent Allowance) claims.
In Assessment Year 2024-25, the Department reportedly flagged 8,000–10,000 cases for possible false HRA claims — many of them selected for:
• Full scrutiny,
• Limited scrutiny, or
• Verification notices to employer AND landlord.
This is not accidental.
This is targeted analytics + data matching.
What the Department is doing now
The Department is issuing Notices u/s 133(6) directly to:
Employers — to verify
• Employee address
• Salary details
• Form 16
• ALL supporting documents submitted for HRA claim
Landlords — to verify whether they have reported the rent received in their ITRs
Why this matters
Many taxpayers still believe:
• “I will show rent paid to a relative…”
• “I will show cash rent…”
• “I live in my own house but will show rent elsewhere…”
Not anymore.
Every false HRA claim now leaves a digital footprint.
The new AIS, PAN-Aadhaar linkage, bank trail matching, landlord ITR verification, and analytics systems are catching such false claims.
If your HRA claim is false, be ready for:
Income addition
Penalty up to 200% for misreporting (Sec 270A)
Interest u/s 234A/B/C
Notices for earlier years
At times Trouble for employer also
Possible prosecution in extreme cases
Final Message:
Before claiming HRA, ensure the rent is real, paid through banking channel, supported with agreement + receipts, and declared by the landlord.
Think 10 times before claiming false HRA — the Department is checking everything.
The copy of the order is as under:
