NEW DELHI, Feb 25: The Government has come out with draft income tax forms that seek disclosure of tenant-landlord relationship for claiming I-T deductions and increased responsibility of auditors and companies for tax credit claims on foreign income.
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The draft forms also propose to entrust auditors with greater responsibility for checking PAN duplication and tax liability arising out of adverse audit observation.
The new Income Tax Act, 2025, which replaces the six-decade-old law, will come into effect from April 1, 2026.
The Government has circulated draft Rules and Forms for stakeholder consultation. The final Rules and Forms will be notified next month.
The new Form 124 requires disclosure of a relationship, if any, between a tenant (assessee) and a landlord, which tax experts said could act as a meaningful deterrent against fictitious or inflated rental claims, as it introduces transparency at the first point of reporting itself.
An assessee claiming House Rent Allowance (HRA) is required to submit a declaration to the employer with regard to the rent estimated to be paid during the fiscal. Under the new Form 124, the assessee will also have to indicate the relationship with the landlord.
“From a governance perspective, even with this new disclosure, genuine arrangements would remain protected, while artificial claims, unsupported by ownership or genuine payments, could be identified with greater precision and, where warranted, disallowed,” Nangia Global Advisors, Partner, Sandeepp Jhunjhunwala said.
The draft forms also propose to enhance the responsibility of auditors as well as the companies with regard to the disclosure of tax credit claims on foreign income.
As per the proposed Form 44 pertaining to ‘Statement of income from a country or specified territory outside India and Foreign Tax Credit (FTC)’, accountants would have to independently examine foreign tax withholding certificates, payment proofs, exchange rate conversions, and treaty eligibility conditions, such as beneficial ownership and tax residency status, for a valid claim of FTC. (PTI)
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