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Claim HRA if rent paid to parents

Saiyam Shah (10 Points)

15 April 2022

Hello,

I am salaried person, working in IT company.

I need to do tax investment planning.

My query is:

Currently I am staying with my parents.

Can I claim HRA if I am giving rent to my parents?

HRA amount allocated by my organization is 4.44LPA.

If i can claim the HRA, upto what amount I can claim?

I am staying in rural area.

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18 Replies

Eswar Reddy S (CFO- at NHTF) (58213 Points)
Replied 15 April 2022

This can lead to many legal issues ..Better not go for this method..

Let the employer deduct the tax

Shankar Rugge (369 Points)
Replied 16 April 2022

A person living in her parents' house can pay them rent and claim exemption for the HRA, provided the parent owns the property. Even in the highest 30% bracket, the arrangement makes sense because there is a 30% standard deduction on rental income.Jan 10, 2022

Eswar Reddy S (CFO- at NHTF) (58213 Points)
Replied 16 April 2022

It will be debatable..

CA Puja Sharma (Chartered Accountant) (4874 Points)
Replied 16 April 2022

Yes, you can pay rent to your parents and then claim HRA.

Please make the rent payment transaction via bank to give sufficient evidence to AO if required.

1 Like

CA Aakarsh Jain (CA) (10216 Points)
Replied 16 April 2022

Agreed with Puja sharma and shankar

2 Like

anil jain (Partner) (1067 Points)
Replied 16 April 2022

I agree with Ms Pooja Sharma.

1 Like

Eswar Reddy S (CFO- at NHTF) (58213 Points)
Replied 16 April 2022

When you are in your own house then how can you rent ?

This will be the question from IT authorities..

Search for Supreme Court judgements favouring your decision

1 Like

CA Aakarsh Jain (CA) (10216 Points)
Replied 16 April 2022

Eswar Reddy S, please don't give wrong advices when you are unaware of the provisions and loop holes. Kindly update urself first.

1 Like

Eswar Reddy S (CFO- at NHTF) (58213 Points)
Replied 16 April 2022

There is no wrong advice rather I gave advice to support your decision through DTL

anil jain (Partner) (1067 Points)
Replied 16 April 2022

Mr Reddy

Father, mother and son are different entities in the eye of income tax.

income of each is taxable in the hands of respective individual and not as a whole.

Hope you will try to read the Income Tax Act carefully.

Regards

Eswar Reddy S (CFO- at NHTF) (58213 Points)
Replied 16 April 2022

Kindly give one case law favouring rent payment to parents for HRA deduction

Saiyam Shah (10 Points)
Replied 16 April 2022

The owner of my house is my Mom. And yes I can submit the rent via bank to my mom's account. Also, I can file the itr on behalf of my mom, for income from rented property.

1 Like