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Tax planning regarding HRA

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Querist : Anonymous

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Querist : Anonymous (Querist)
04 June 2010 Dear experts,

I have been receiving basic salary of Rs. 1 lac p.m. and HRA Rs. 20000/- p.m. till now. I was paying house rent of Rs. 25000/- p. m. by cheque to my father and takes rent receipts from him as well. He is also showing that income in his return.

Now my company has revised my CTC and now I am receiving HRA Rs. 40000/- p.m.

Please suggest me the best feasible way to reduce my tax liability. Would it be proper to pay higher rent payment to my father.

Thanks and regards
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CA. BIJENDER KR. BANSAL

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CA. BIJENDER KR. BANSAL (Expert)
04 June 2010 AS YOU WROTE, YOUR FATHER IS FILING HIS RETURN AND SHOWING RENT INCOME IN HIS ITR.
THEN YOU CAN PAY HIGHER RENT TO CLAIM HRA.
AS PER IT ACT, THERE IS NO LIMIT OF RENT PAID. YOU CAN PAY HIGHER RENT.

BUT YOU HAVE TO CONSIDER FAIR MARKET VALUE OF HOUSE, WHETHER IT IS FESIABLE THAT IF SUCH HOUSE IS LET OUT TO OUTSIDER THEN SUCH RENT WOULD BE RECOVERED.
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