Yes u can pay rent and claim as hra it's legal yes ur grandfather shows as rental income
If it more then lacs then paid through cheque nd quoted pan card also
There are two pre-conditions to claim HRA u/s 10(13A) 1) employee should receive HRA from employer 2) employee should make payment towards lease rental
If employee is not getting HRA from employer, it will specifically dealt with other provisions of the Act other than 10(13A).