The Income Tax Department has introduced detailed reporting requirements for various deductions in ITRs for FY 2026-27, applicable from the current financial year. According to recent reports, the department wants to know additional details in respect of all deductions claimed by the assessee for more clarity and curbing false deductions. The due date for filing income tax returns for individuals (other than audit assessee) has been extended from 31st July 2025 to 15th September 2025. Taxpayers can claim deductions under House Rent Allowance, interest on home loan in case of self-occupied properties, and deductions under sections 80C to 80U, but must provide comprehensive details for each claim. For AY 2026-27, ITR-1 is applicable for eligible resident individuals with total income up to ₹50 lakh including salary, two house properties, other sources, and long-term capital gains under Section 112A up to ₹1.25 lakh. ITR-4 is applicable for eligible resident individuals, HUFs and firms other than LLPs with total income up to ₹50 lakh and presumptive business/professional income under Sections 44AD, 44ADA or 44AE.
Taxpayers can claim both HRA exemption under Section 10(13A) and home loan interest deduction under Section 24(b) simultaneously, provided specific conditions are met. According to Siddharth Maurya, Managing Director of Vibhavangal Anukulkara, HRA can be claimed for rent actually paid while interest deduction can be claimed for a home loan on different or even the same property, provided the taxpayer is not actually living in the owned house. However, these benefits are available only under the old tax regime, not the new tax regime. The new ITR reporting rules require taxpayers to provide detailed information about the loan source, outstanding balance, and interest paid under Section 24(b).
The HRA exemption under Section 10(13A) requires actual rent payment and is calculated as the least of three amounts: actual HRA received, rent paid minus 10% of salary, or 50% of salary for specified metro cities or 40% for other cities. For home loan interest deductions, interest deduction is capped at ₹2 lakh for a self-occupied property. For let-out properties, there is no overall cap on interest deduction, though the loss from house property that can be set off against other income is capped at ₹2 lakh. The new ITR reporting requires taxpayers to specify the loan account number, outstanding balance as on 31st March, and interest on borrowed capital under Section 24(b).
Claiming HRA while renting and treating an owned house as 'self-occupied' can raise questions when both properties are in the same city. Maurya noted that living separately from an 'available' self-occupied house without genuine cause can appear suspicious to tax authorities. However, both HRA exemption and home loan interest deduction can be claimed when the taxpayer genuinely pays rent because of employment location while family members stay in the owned house in another city. The arrangement must be commercially reasonable and not just a device to get dual benefits without proper justification. The new ITR reporting system requires taxpayers to provide detailed information about the bank or institution from which the loan is taken, loan outstanding as on 31st March, and specific details about the property arrangement.
Taxpayers must maintain comprehensive documentation including rent agreement and receipts, landlord's PAN if annual rent exceeds ₹1 lakh, proof of employment location, home loan interest certificate from the lender, and property ownership documents. Maurya emphasized that the Income Tax Department cross-verifies data through multiple sources including Form 26AS, AIS/TIS, Form 16, landlord PAN, TDS under Section 194-IB, property records and home loan interest certificates. Any mismatch in HRA, property status, or loan interest can trigger scrutiny or defective notices during ITR processing. The Income Tax Department clarifies that ITR forms are annexure-less, so documents are generally not attached with the return, but they should be kept safely for future verification or assessment. The new ITR reporting system requires taxpayers to provide detailed information about the loan source, outstanding balance, and interest paid under Section 24(b), along with comprehensive documentation for all claimed deductions.
