ITR 2025: How to Claim HRA For Your Hometown Without Getting A Tax Notice

If you're planning to claim tax deductions—especially under the old tax regime—prepare for a lot more than just numbers. The Income Tax Department has overhauled its ITR forms and utilities to enforce stricter compliance for deductions like HRA, 80C, 80D, 80E (education loans), and 80EEB (EV loans).

The updated system is driven by automated validation checks and AI scrutiny. Taxpayers will now be required to provide granular details, including addresses, document IDs, and account numbers. Failure to do so will either prevent filing or could lead to scrutiny notices.

HRA Claims: Address Mismatches Could Trigger Red Flags
Claiming House Rent Allowance (HRA)? You’ll need to disclose:
Place of work
Actual HRA received
Actual rent paid
Basic salary and dearness allowance
Whether the city is metro or non-metro

This data will be cross-verified. For instance, claiming rent for a city you don’t live in or work from could be flagged.

Mr. Deepak Kumar Jain, Founder and CEO of TaxManager.in, warned, “Tax Authorities are getting stricter on HRA claim by Tax Assessee if they appear inconsistent—for example, location of your employer and HRA claim are for different cities. This may trigger a red flag for scrutiny.”

He added that if your Aadhaar address or ITR address doesn’t match the city for which HRA is being claimed, it could trigger mismatches under new AI-driven scrutiny rules.
To stay compliant, Jain advises:
Keep valid rent agreement and rent receipts handy
Ensure that the address details are consistent across documents

 

When Family Lives Elsewhere: What Happens to HRA?
The situation isn’t always black and white. Mr. Vivek Jalan, Partner at Tax Connect Advisory Services LLP, offered clarity on cases where families stay behind in a rented home while the taxpayer moves due to job transfers.

“Even if an employee works outside his hometown and his family continues to stay in rented accommodation in the hometown, HRA claim for rent paid there cannot be denied,” said Jalan.

He cited the example of an employee transferred from Hyderabad to Kolkata, while his children continue schooling in Hyderabad. The rent paid for the Hyderabad home, where the family resides, is still eligible for HRA deduction.

However, Jalan cautioned that: “Any mismatches of the HRA claim vis-à-vis documentation like rent receipts, agreements, and payment records can trigger scrutiny. Cash payments, rent paid to family members, or mismatches in the landlord’s PAN may invite further questioning.”

Beyond HRA: Deductions Under 80C, 80D, and Loans
The new ITR forms now require:
Policy or document numbers
Name of the insurer or institution
Loan account number, sanction date, and outstanding balance
If these fields are incomplete or inaccurate, your return may not even get filed.

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Accuracy is Your Best Policy
While these stricter norms apply only to those opting for the old tax regime, experts caution that the margin for error is razor-thin this year. AI-based validation and increased cross-verification between documents and disclosures are here to stay.

As Jain sums it up: “Claim smart, or don’t claim at all.” So, whether you’re claiming HRA or deductions under sections 80C and 80D, make sure your paperwork is tight, your details match, and your claims are legitimate.