The Ministry of Finance recently issued a clarification regarding media reports suggesting a special drive by the Central Board of Direct Taxes (CBDT) to reopen cases linked to House Rent Allowance (HRA) claims. These reports, according to the Ministry, are not grounded in reality, and there is no substantial evidence to support claims of a large-scale reopening of cases.
The Ministry pointed out that while certain instances of discrepancies between taxpayer filings and data available with the Income Tax Department have been noted, these are part of routine data verification exercises. The CBDT has merely alerted taxpayers in such cases to rectify any inaccuracies. However, misinformation circulating on social media and in certain media articles has raised concerns about CBDT’s actions, particularly regarding HRA claims.
Clarifying further, the Ministry stated that any apprehensions about retrospective taxation or widespread reopening of cases related to HRA claims are unfounded. Data analysis was conducted in select high-value cases to address mismatches between rent payments by employees and rent receipts by landlords for the fiscal year 2020-21. This analysis was not intended to reopen a large number of cases but rather to identify and rectify specific discrepancies.
Moreover, the verification process focused solely on the fiscal year 2020-21 and was conducted without impeding the filing of Updated Returns for the same period, which was allowed until March 31, 2024. The Ministry emphasized that the objective was to address mismatches in information for the specified fiscal year without disrupting other cases.
In conclusion, the Ministry of Finance reiterates that there is no special drive to reopen cases related to HRA claims, contrary to misleading media reports. The CBDT’s actions are aimed at ensuring tax compliance and rectifying discrepancies through routine data verification processes. Taxpayers are urged to remain vigilant against misinformation and rely on official communications for accurate information regarding tax-related matters.
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Ministry of Finance
CBDT clarifies on media reports claiming special drive to reopen cases with reference to HRA claims
There is no special drive to re-open cases of mismatch, and media reports alleging that large-scale re-opening is being undertaken by the CBDT are completely misplaced
Apprehensions are about retrospective taxation in this matter and re-opening of cases on issues pertaining to HRA claims is completely baseless
Posted On: 08 APR 2024
Certain instances of mismatch of information as filed by the taxpayer and as available with the Income Tax Department have come to the notice of the Department as part of its routine exercise of verification of data. In such cases, the Department has alerted the taxpayers to enable them to take corrective action. However, some posts on social media, as well as articles in the media, have highlighted enquiries initiated by the Central Board of Direct Taxes (CBDT) in cases where employees have made incorrect claims of HRA and rent paid.
At the outset, it is stated that any apprehensions about retrospective taxation on these matters and re-opening of cases on issues pertaining to HRA claims is completely baseless.
Data analysis was carried out in some high-value cases of mismatch between the rent paid by the employee and receipt of rent by the recipient for the FY 2020-21.
This verification was done in a small number of cases without re-opening bulk of cases, especially since Updated Return for FY 2020-21 (AY 2021-22) could have been filed by the taxpayers concerned only till 31.03.2024.
It is underlined that the objective of the e-verification was to alert cases of mismatches of information for FY 2020-21 only without affecting the others.
It is reiterated that there is no special drive to re-open such cases, and media reports alleging that large-scale re-opening is being undertaken by the Department are completely misplaced.
