New I-T forms mandate tenant-landlord disclosure for deductions

The Centre has issued draft income tax forms under the Income Tax Act, 2025, introducing tighter disclosure requirements for individuals, companies and auditors. The new law will take effect from April 1, 2026, replacing the six-decade-old Income Tax Act, 1961. Final rules and forms are expected next month after consultations.

A major change is the introduction of Form 124, which requires individuals claiming House Rent Allowance (HRA) to disclose whether they share any relationship with their landlord. At present, salaried employees submit a declaration of estimated rent to their employer. Under the proposed format, they must additionally specify the nature of their relationship, if any, with the property owner. Tax experts say this move aims to deter inflated or fictitious rental claims while safeguarding genuine arrangements backed by ownership and actual payments.

The draft forms also increase the responsibility of auditors in verifying Foreign Tax Credit (FTC) claims. Proposed Form 44 requires accountants to independently examine foreign tax withholding certificates, proof of tax payment, exchange rate conversions and treaty eligibility conditions such as tax residency and beneficial ownership. Experts note that challenges may arise where foreign jurisdictions issue consolidated tax statements, where tax is paid in a different year, or where assessments are provisional.

Companies applying for a Permanent Account Number (PAN) must now declare that they do not already hold one. Entities will be expected to carry out internal checks to prevent duplicate PAN applications, including verification of branches or predecessor entities.

Further, the new Tax Audit Form 26 mandates disclosure of whether audit qualifications or adverse remarks affect taxable income or book profits. Tax audit reports must also provide details of accounting software, cloud storage, server location and related data records maintained in India.