Tax · HRA

Rent Receipts and HRA: The 2026 Rules Every Tenant and Landlord Should Know

18 August 2026 · 5 min read

If you're a salaried tenant in India, House Rent Allowance is probably the single biggest tax exemption available to you — sometimes worth ₹2–4 lakh of income shielded from tax in a given year. But claiming it correctly got noticeably stricter for FY 2026-27, and a lot of people are about to be caught off guard by documentation they didn't know they needed.

What actually changed this year

From April 1, 2026, the old Form 12BB — the standard declaration salaried employees submitted to their employer for HRA and other tax claims — has been replaced by a new form, Form 124. The new form asks for more than the old one did: your landlord's full name, address, and PAN, plus something genuinely new — you now have to disclose your relationship with your landlord.

That last part matters. It's aimed squarely at a common but technically improper practice: someone "paying rent" to a parent or relative purely on paper to claim the exemption, without a real tenancy actually taking place. If the arrangement is genuine — you really do pay rent, and the landlord (even if it's your parent) genuinely declares it as rental income — it remains completely legitimate. The disclosure just makes it visible to the tax authorities.

There's also a second change worth knowing if you're in one of India's fast-growing tech hubs: the list of "metro cities" that qualify for the higher 50% HRA exemption rate (instead of 40%) has expanded. Previously limited to Mumbai, Delhi, Kolkata, and Chennai, it now also includes Bengaluru, Hyderabad, Pune, and Ahmedabad. If you live and work in any of these cities, you may be entitled to a meaningfully larger exemption than before, and it's worth checking your employer has actually applied the updated rate.

The documents you actually need

Regardless of the new form, the underlying documentation requirements haven't gone away — if anything, they're being checked more carefully:

• Monthly rent receipts, signed by the landlord. A revenue stamp is generally expected once monthly rent crosses ₹5,000.
• A rent agreement showing the rent amount and tenancy period — increasingly expected as standard proof, not optional.
• Your landlord's PAN, mandatory once your total annual rent crosses ₹1 lakh (roughly ₹8,334/month). If your landlord doesn't have a PAN, a signed declaration with their name and address is the accepted alternative — you don't submit this to your employer or in your return, but you should keep it on file.
• Proof the rent was actually paid, ideally through a bank transfer, UPI, or cheque rather than cash. This isn't yet a strict legal requirement in every case, but it's the difference between a claim that's trivially easy to verify and one that invites scrutiny.

How the exemption is actually calculated

The exempt amount isn't simply whatever HRA your employer pays you — it's the lowest of three figures:

1. The actual HRA you receive
2. 50% of salary (metro cities) or 40% (non-metro), as defined above
3. Rent paid, minus 10% of your salary

Only rent paid above that 10%-of-salary threshold counts toward the exemption at all — a detail that trips up a lot of first-time claimants who assume their full rent amount is exempt.

One more thing worth knowing: HRA exemption is only available under the old tax regime. If you've opted into the new regime, this benefit isn't available to you at all — worth factoring in before you decide which regime to file under.

If you missed the deadline

Employers typically collect this documentation between January and March for the outgoing financial year. If you missed that window, or your employer processed it incorrectly, you're not out of luck — you can still claim the correct HRA exemption directly in your ITR, and any excess tax deducted will be refunded. Keep your rent receipts and agreement on file regardless, in case your return is picked up for scrutiny later.

Why this matters for landlords too, not just tenants

If you're a landlord, this isn't only your tenant's problem. A tenant who can't produce a proper rent receipt or your PAN when they need it will come asking — often at exactly the wrong, last-minute moment in tax season. Landlords whose rental income is properly documented also have an easier time if their own return is ever reviewed, since the paper trail already exists.

This is one of the more mundane but genuinely valuable things a proper rent-collection system does: every payment automatically produces a dated, numbered receipt tied to the right tenant, unit, and month — the exact thing that turns a stressful January scramble into something that was already handled back in April.

This article is general information, not tax advice. Rules can change, and individual circumstances vary — consult a tax professional for guidance specific to your situation.