The Income Tax Department’s latest updates to ITR-1 and ITR-4 for Assessment Year 2025–26 have sent a clear message—claiming deductions and exemptions under the old tax regime will no longer be a matter of mere declaration. Substantiation is now non-negotiable.
While the new tax regime, introduced under Section 115BAC, promises lower tax rates with no exemptions, many taxpayers—especially salaried individuals and middle-class professionals—have preferred to stick with the old regime to benefit from deductions like HRA, 80C, 80D, and home loan interest. However, the government appears to be tightening the compliance screws on this choice.
Here’s how opting for the old regime just got more demanding:
1.Detailed Disclosure for House Rent Allowance (HRA) Exemption
To claim exemption under Section 10(13A) for House Rent Allowance (HRA), taxpayers are now required to furnish a broader set of data points. The revised ITR forms seek the following information:
- Place of Work
- Actual HRA Received
- Rent Paid
- Basic Salary and Dearness Allowance (DA)
- 50% or 40% of Basic + DA depending on whether the location is metro or non-metro
This granular disclosure is aimed at facilitating accurate computation of HRA exemption and reducing instances of arbitrary claims.
2. Section 80C Deductions: Mandatory Supporting Details
For claiming deductions under Section 80C—such as investments in Public Provident Fund (PPF), life insurance premiums, and other eligible instruments—taxpayers must now disclose:
- Document or Receipt Number
- PPF Account Number
- Life Insurance Policy Number
These additional requirements aim to strengthen audit trails and mitigate the risk of unverifiable or fictitious claims.
3. Section 80D: Health Insurance Information
In a move to streamline health insurance-related deductions, the new ITR forms now require those claiming benefits under Section 80D to report:
- Name of the Insurance Company
- Policy or Document Number
Such disclosures will assist in verifying the legitimacy of the deduction and ensure that the policy is held in the name of the assessee or eligible family members.
4. Section 80E: Interest on Education Loans
Taxpayers availing of deductions for interest payments on education loans under Section 80E must now furnish the following details:
- Name of the Lending Institution
- Bank Name
- Loan Account Number
- Date of Loan Sanction
- Total Loan Amount Sanctioned
- Outstanding Loan Balance as on 31st March
This shift underscores the government’s intent to better monitor educational financing and curb misuse of the provision.
5. Sections 80EE and 80EEA: Interest on Residential Home Loans
In line with the broader push for accountability, deductions claimed under Section 80EE or 80EEA for interest on housing loans now require similar disclosures, including:
- Name of the Lender
- Bank Name
- Loan Account Number
- Date of Loan Sanction
- Sanctioned Loan Amount
- Outstanding Loan Amount as on 31st March
This data will allow for better compliance monitoring in relation to first-time homebuyer incentives.
6. Section 80EEB: Interest on Electric Vehicle Loans
To claim deductions under Section 80EEB—pertaining to interest on loans taken for the purchase of electric vehicles—taxpayers must disclose:
- Name of the Lending Institution
- Bank Name
- Loan Account Number
- Date of Loan Sanction
- Sanctioned Loan Amount
- Loan Outstanding as on 31st March
This detailed reporting requirement aligns with the government’s emphasis on sustainable mobility and targeted subsidies.
7. Section 80DDB: Treatment for Specified Diseases
Deductions under Section 80DDB, which relate to the treatment of specified diseases for self or dependents, now necessitate an explicit mention of:
- Name of the Specified Disease
This clarification aims to bring consistency in claims and facilitate quicker assessments, especially where certificates from prescribed authorities are submitted.
Final Thoughts
Navigating the Trade-Off Between Savings and Simplicity
While the old tax regime still offers a range of deductions and exemptions, the government has clearly shifted the onus onto the taxpayer to prove every claim with precision. These enhanced disclosure requirements mark a significant shift from convenience to compliance. Choosing between regimes must now consider not only financial benefit but also the practical effort of compliance. As tax compliance evolves, so must our approach to choosing what works not just financially—but practically.
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