House Rent Allowance Claims Now Need Form No. 124 Disclosure Under Rule 205

(INDIA) — Employees who claim House Rent Allowance from April 1, 2026 should expect tighter employer checks, especially if rent is paid to a parent or other relative. The main change is simple but important: under proposed Rule 205 and the new Form No. 124, you must disclose your relationship with the landlord, if any, when giving HRA details to your employer for salary tax deduction.

This guide covers tax year 2026-27 in India. It reflects the position current as of March 29, 2026. The HRA disclosure language appears in the Draft Income-tax Rules, 2026, issued by CBDT, and is expected to align with the Income-tax Act, 2025, which takes effect on April 1, 2026.

For most salaried employees, this is not a ban on HRA claims for rent paid to a father, mother, or other relative. It is a documentation and disclosure change. If the arrangement is genuine, HRA can still be claimed.

Who needs to file Form No. 124 for HRA

You likely need to furnish HRA details to your employer if all of these apply:

• You are a salaried employee
• You receive House Rent Allowance as part of salary
• You pay rent for a residence you actually occupy
• You want your employer to consider HRA while computing TDS on salary
• You are giving proof under Rule 205 through Form No. 124

If you pay rent to a father or another relative, the same filing applies. The extra step is the new relationship disclosure.

HRA eligibility checklist

Warning: Paying rent to a parent is not barred. But paper-only arrangements, back-dated agreements, or cash payments without proof can trigger employer rejection or later scrutiny.

What changes for HRA from April 1, 2026

The headline change is the move to a new employer declaration format.

Under the draft framework:

• Rule 205 governs evidence employees furnish to employers for salary TDS purposes
• The old employee declaration format is replaced by Form No. 124
• For House Rent Allowance, employees must state:
• landlord’s name
• landlord’s address
• landlord’s PAN where annual rent exceeds ₹1,00,000
• relationship with the landlord, if any

That last item is the new feature.

This matters most where rent is paid within the family. If your landlord is your father, mother, spouse’s parent, or another relative, the employer-side declaration will now make that visible at the TDS stage.

The long-standing ₹1,00,000 threshold for landlord PAN does not go away. The relationship disclosure is in addition to that rule.

Rule 205 and Form No. 124: what they do

The draft Income-tax Rules, 2026 place HRA proof under Rule 205. This rule deals with evidence and particulars employees provide to the employer for tax deduction from salary.

For HRA, the table under Rule 205 adds a specific disclosure line. Employees must report the relationship with the landlord, if any. That makes Form No. 124 the working document employers will use for HRA checks.

In practice, the new form does two things:

1. It keeps the standard HRA landlord details already familiar to payroll teams.
2. It adds a focused disclosure for family rent arrangements.

Employers will then use this data while computing salary TDS under section 392 of the Income-tax Act, 2025.

Policy status and timeline

Here is the timeline as of March 29, 2026:

The draft text already places the HRA relationship disclosure on record. Market and professional commentary has treated the change as part of the April 1, 2026 rollout.

What professionals and the financial press are saying

Professional commentary has been consistent on two points.

First, the HRA exemption formula itself remains in place. Law firm analysis, including commentary from Khaitan & Co, notes that exemption continues to be computed as the least of:

• actual HRA received
• rent paid minus 10% of salary
• 50% of salary for specified metro cities
• 40% of salary for other cities

Second, the compliance standard is tighter where rent is paid to relatives. Financial publications have highlighted that family arrangements are still allowed, but the employer declaration will now capture the relationship directly.

If you pay rent to your father, can you still claim HRA?

Yes, a genuine rent payment to your father can still support an HRA claim.

The change does not create a legal ban. It changes what you must disclose to your employer.

If annual rent exceeds ₹1,00,000, you must provide:

• your father’s name
• address
• PAN
• the fact that the landlord is your father

Your employer can then use Form No. 124 when working out monthly salary TDS.

HRA exemption caps: metro vs non-metro

The draft commentary refers to eight metro cities for this purpose:

• Mumbai
• Kolkata
• Delhi
• Chennai
• Hyderabad
• Pune
• Ahmedabad
• Bengaluru

This cap affects the HRA exemption calculation. It does not change the disclosure rule.

Documents you’ll need

Before you submit Form No. 124, gather these records:

Basic HRA documents

• Salary structure showing House Rent Allowance
• Rental agreement
• Full property address
• Monthly rent amount
• Tenure of tenancy

Landlord details

• Landlord’s full name
• Landlord’s current address
• Landlord’s PAN if annual rent exceeds ₹1,00,000
• Contact details, if your employer asks for them

Payment proof

• Bank transfer records
• UPI screenshots or statements
• Cheque copies
• Rent receipts

If landlord is your father or another relative

• Relationship disclosure for Form No. 124
• Proof that you actually occupy the property
• Consistent monthly payment trail
• Confirmation that the landlord will report rent in his or her tax return, where applicable

Tax Tip: If you pay rent to a parent, use one payment method for the full year. A clean monthly bank trail is stronger than mixed cash and transfer records.

Step-by-step filing process for HRA under Form No. 124

This is the practical filing flow for tax year 2026-27.

Step 1: Create a genuine rental agreement

The agreement should include:

• tenant and landlord names
• property address
• monthly rent
• security deposit, if any
• rental period
• payment mode
• signatures

If local state rules require stamp duty or registration, follow them.

Step 2: Pay rent through traceable channels

Use:

• bank transfer
• UPI
• cheque

Avoid cash where possible. A family arrangement with no bank trail is harder to defend.

Step 3: Collect landlord details

You need the landlord’s:

• name
• address
• PAN if annual rent exceeds ₹1,00,000

If the landlord is your father, get these details before payroll asks for them.

Step 4: Complete Form No. 124

When entering HRA details, disclose:

• total rent paid
• landlord name and address
• landlord PAN, if required
• relationship with the landlord, if any

This is the new reporting point tied to Rule 205.

Step 5: Submit Form No. 124 to your employer

Provide the form at the start of the tax year or by your employer’s payroll proof deadline.

There is no one public employer cut-off date for all taxpayers. Each employer sets payroll timelines. Submit early so TDS is reduced correctly during the year.

Step 6: Keep proof for the full year

Retain:

• agreement
• receipts
• payment proof
• landlord PAN copy or PAN details
• any employer acknowledgment

Step 7: Check Form 16 or annual salary records

At year-end, verify that your employer considered the HRA claim correctly in salary TDS records.

Deadlines and timing

Deadline Alert: If you want lower monthly TDS from April 2026 onward, submit Form No. 124 before your employer’s first salary-proof cut-off. Late proof can mean higher TDS during the year.

Common mistakes to avoid

• Claiming HRA without actually living in the rented property
• Using a back-dated rental agreement
• Paying a parent in cash without receipts
• Missing the landlord PAN when annual rent exceeds ₹1,00,000
• Forgetting to disclose the landlord relationship in Form No. 124
• Claiming rent that looks far above market without support

For immigrants and cross-border taxpayers

This article addresses Indian salary payroll rules. If you are also a U.S. tax resident, Indian salary and rent-related records may still matter for your U.S. filing.

Useful IRS references include:

• IRS Publication 519, U.S. Tax Guide for Aliens
• IRS international taxpayers portal: irs.gov/individuals/international-taxpayers
• IRS forms and publications: irs.gov/forms-pubs

A U.S. person with Indian salary income may also need to review:

• Form 1040
• Form 1116 for foreign tax credit, if eligible
• treaty rules in IRS Publication 901

If you are on F-1, J-1, H-1B, L-1, or hold a green card, your U.S. tax residency status can change how Indian employment income is reported in the United States. Publication 519 is the main IRS reference.

What to do now

If you plan to claim House Rent Allowance from April 1, 2026, take these steps before the first payroll cycle:

• sign a real rental agreement
• pay rent through bank, UPI, or cheque
• collect the landlord’s PAN if annual rent exceeds ₹1,00,000
• prepare to disclose the landlord relationship in Form No. 124
• submit documents before your employer’s salary TDS cut-off

If your landlord is your father, state that relationship plainly and keep every payment record. The claim can still stand, but the paperwork must match the facts.

Disclaimer: This article is for informational purposes only and does not constitute tax, legal, or financial advice. Tax situations vary based on individual circumstances. Consult a qualified tax professional or CPA for guidance specific to your situation.