HRA desuction

Tax planning 245 views 3 replies

New Bee

1 Points Joined January 2022

I am moving to Bangalore and planning to rent out an apartment, renting the apartment will cost 22-25K, while leasing would cost 10-12lakhs.

My father has suggested leasing and he will fund it. But this will make me ineligible to take an HRA deduction from my salary.

Can we have a rental agreement with my dad, and pay rent to him and take HRA deduction in my ITR.

If so, how should my dad show this income in his ITR under which source of income?

Thank you.

Replies (3)

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

211468 Points Joined July 2016

1. Yes. its possible.

2. U/h. IFOS.

sabyasachi mukherjee

Profession Business

28196 Points Joined May 2017

Sec 10(13A) ŔULE 2A

NOWADYS THE RENTAL AGREEMENT IS TERMED AS LEAVE AND LICENSE AGREEMENT.
HE WILL NOT BE ELIGIBLE FOR EXEMPTION AS MRNTIONED IN SEC 10(13A) RULE 2A.
HE GETS A HOUSE RENT ALLOWANCE .
EXEMPTION LOWER OF THE THREE:
1. RENT PAID IN EXCESS OF 10% OF SALARY
2. 10% OF SALARY
3. RENT PAID.
IN THIS CASE HOUSE RENT ALLOWANCE IS NOT MENTIONED.

debora M

BUSINESS DEVELOPMENT MANAGER

1697 Points Joined February 2019

House Rent Allowance is determined based on certain factors like the city of residence and your salary. If you live in a metropolitan city then your HRA is equivalent to 50% of your basic salary.If you do not get paid any dearness allowance or commissions, the HRA you should get is equivalent to 40% - 50%.

Your allotted HRA cannot exceed more than 50% of your basic salary. As a salaried employee, you cannot claim for the full rental amount you are paying. Your exemption will be based on the least of the below-mentioned options: The actual amount allotted by the employer as the HRA.