HRA Deduction
This query is : Resolved
04 March 2011
Our home is on my mother's name.My father,a Govt. employee,wants to claim HRA deduction by showing that he is living here on rent.My mother is also a Govt. employee.
Kindly help me in deciding the issue.To claim HRA what tax planning can be done ?
Kindly help me in deciding the issue.To claim HRA what tax planning can be done ?
04 March 2011
You can claim HRA if you fulfill certain conditions:
~ You have an HRA allowance as part of your salary package.
~ You are staying in a rented accommodation.
~ You are actually paying rent for the residential accommodation occupied by you.
~ The rent must exceed 10% of your salary. Salary, in this case, includes your basic component and the dearness allowance.
If you satisfy these conditions, you are eligible to claim exemption on the HRA received by you.
Which brings us to the next question.
How much can you claim?
HRA is exempt to the extent of the least of the following:
1) The actual amount of HRA received.
2) 40% of salary (basic component + dearness allowance). This increases to 50% if you are renting out the house in Delhi, Mumbai,Chennai or Kolkata.
3) Rent paid minus 10% of Salary (basic component + dearness allowance)
~ You have an HRA allowance as part of your salary package.
~ You are staying in a rented accommodation.
~ You are actually paying rent for the residential accommodation occupied by you.
~ The rent must exceed 10% of your salary. Salary, in this case, includes your basic component and the dearness allowance.
If you satisfy these conditions, you are eligible to claim exemption on the HRA received by you.
Which brings us to the next question.
How much can you claim?
HRA is exempt to the extent of the least of the following:
1) The actual amount of HRA received.
2) 40% of salary (basic component + dearness allowance). This increases to 50% if you are renting out the house in Delhi, Mumbai,Chennai or Kolkata.
3) Rent paid minus 10% of Salary (basic component + dearness allowance)
04 March 2011
Now comes answer to the first part of question.
It is NO. There can be 2 cases for payment of Rent to relative.
Case- I - Payment to your Parents
If you want to pay rent to your parents -- who in this case are the landlords -- you should request the owner of the house (which will be one of your parents) to declare it in his/ her personal income tax return. This will prevent any litigation in the future.
Case-II- Payment to ur wife
Some individuals want to pay rent to their spouse.
When living with your spouse, you cannot claim HRA. The relationship between a husband and wife is not commercial in nature; a husband and wife are supposed to stay together.
So payment of rent to a spouse will not be accepted by the income tax authorities.
It is NO. There can be 2 cases for payment of Rent to relative.
Case- I - Payment to your Parents
If you want to pay rent to your parents -- who in this case are the landlords -- you should request the owner of the house (which will be one of your parents) to declare it in his/ her personal income tax return. This will prevent any litigation in the future.
Case-II- Payment to ur wife
Some individuals want to pay rent to their spouse.
When living with your spouse, you cannot claim HRA. The relationship between a husband and wife is not commercial in nature; a husband and wife are supposed to stay together.
So payment of rent to a spouse will not be accepted by the income tax authorities.
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