CBDT Provides Relief to Taxpayers Regarding HRA Claims: Clarification on Retrospective Taxation

In response to recent media reports and social media posts concerning inquiries into HRA claims, the Central Board of Direct Taxes (CBDT) has issued a clarification to address misconceptions and provide reassurance to taxpayers.

The CBDT has acknowledged instances of discrepancies between the information provided by taxpayers and that available with the Income Tax Department. These discrepancies were identified as part of routine data verification exercises. In such cases, taxpayers have been notified to rectify any inaccuracies.

Contrary to speculation, the CBDT emphasizes that there is no intention of imposing retrospective taxation or reopening cases related to HRA claims. The recent data analysis primarily focused on cases involving significant disparities between the rent paid by employees and the rent received by landlords for the financial year 2020-21.

It's important to note that this verification process targeted a limited number of high-value cases and did not entail a widespread reopening of cases. Moreover, taxpayers had the opportunity to file updated returns for the fiscal year 2020-21 until March 31, 2024.

The CBDT clarifies that the objective of this exercise was solely to address mismatches in information for the specified fiscal year without causing disruptions to other cases.

Media reports suggesting otherwise are unfounded, as there is no concerted effort by the Department to reopen such cases on a large scale. The CBDT assures taxpayers that any concerns regarding retrospective taxation and widespread reopening of cases are baseless.

Surabhi Ahluwalia, Principal Commissioner of Income Tax (Media & Technical Policy) and Official Spokesperson for CBDT, reiterates this stance, emphasizing the Department's commitment to fair and transparent tax administration.