Income Tax dept sends notices for HRA claims without TDS deductions

Salary taxpayers who have claimed House Rent Allowance (HRA) but failed to deduct tax at source (TDS) from their rent payments during previous fiscal years are reportedly receiving letters from the Income Tax Department.

The purpose of these notifications is to ask taxpayers to confirm their claims and, in the event that they are false, to make the necessary changes to their tax returns by the March 31 deadline. According to the law, if a tenant's monthly rent exceeds ₹50,000, they must pay 2% TDS (down from 5% in October 2024), provided that the landlord is an Indian resident.

Regardless of the rent amount, the TDS rate is 31.2% when the landlord is a non-resident Indian (NRI). However, “those who have claimed genuine HRA don’t need to file an amended return," the article quoted Bhawna Kakkar, founder of Kakkar & Company, Chartered Accountants, as saying.