Legality of large rent (75k) paid to parents for HRA deduction

Hello all,

I will soon be starting work and my employment contract gives me an HRA of 9 lakh per annum (75k per month).

Since I live with my parents, in order to minimise income tax, I am planning to create a rental agreement with my retired father as the landlord. I will pay him 75k rent monthly via bank transfer. We will also show the same as rental income in my father's ITR.

Since my father is a senior citizen, the income tax on the rental income my father will pay would be much lesser than the income tax I would pay in the highest tax bracket.

Will this be legal?
Will paying such high rent raise any questions later?

Thanks in advance for your kind advise and counsel.

P.S: I have read other posts here regarding paying rent to parents, most of them have mixed answers(some saying yes, some saying no), so I created this separate post to specifically enquire whether such large amount of rent would be allowed or not.

Replies (2)
Quick Summary
An individual plans to pay a substantial monthly rent of £75,000 to their retired father to claim House Rent Allowance (HRA) for income tax benefits. The rent would be formalised via a rental agreement, and the father would declare it as income. The core question is whether paying such a large sum is legally permissible and if it might attract scrutiny from tax authorities, especially given the significant tax savings anticipated compared to the individual's higher tax bracket.

1. Yes rent can be paid to house owner with registered rent deed.

2. It cannot be more than 10% above notional rent in the area, or the rent prevailing in the area.

TDS need to be deducted if rent is more than Rs.50000 p.m.

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