⚠️ AI-Driven Scrutiny: HRA Claims Under Radar This Year!

“But the rent was below ₹50,000 — how did they even notice?”

This year, many salaried taxpayers, especially in the lower and middle-income brackets, have been surprised to receive scrutiny notices from the Income Tax Department.

One common reason? House Rent Allowance (HRA) claims that don’t match with the landlord’s declared income.

🏠 Real Scenario:

A salaried employee claimed HRA exemption for rent paid to a landlord — below ₹50,000 per month, so no TDS was deducted.

• No rent agreement submitted

• The landlord didn’t disclose the rental income in their ITR

• Assessee assumed the amount was “too small” to be tracked

  
  

But now, with AI-based data matching, even such small transactions are getting flagged.

📌 The system noticed the discrepancy between the employee’s HRA claim and the landlord’s ITR, triggering a notice.

🧾 Result:

Now the taxpayer is facing:

• Scrutiny

• Demand for additional tax

• Interest

• And possibly penalties under sections like 270A

🔍 What You Should Know:

• Income Tax systems are becoming AI-enabled and data-driven

• Even non-TDS transactions are being monitored

• Claiming HRA? Make sure:

  
  

  • There’s a proper rent agreement

  • Rent receipts are available

  • Landlord reports the rental income in their ITR

💡 Tip:

Don’t assume small amounts will go unnoticed.

Accuracy and documentation matter more than ever — even for routine salary deductions.

⚖️ Disclaimer:

This post is intended for informational purposes only and should not be considered as legal or tax advice. Readers are advised to consult a qualified Chartered Accountant or tax professional before taking any action based on this content.

We do not accept any liability for any decisions taken without professional consultation. This post does not establish any client-advisor relationship.