ITR
Claiming HRA for rent paid to parents
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Facts
Yes, if the arrangement is genuine: the parent owns the house, you actually pay rent, and the parent reports the rent as income in their return.
Provisions and law
- Sec 10(13A), Income-tax Act 1961 (now Sec 11 (Schedule III, Table Sl. No. 11))HRA exemption is the least of actual HRA received, rent paid minus 10% of salary, and 50% of salary in Delhi, Mumbai, Kolkata or Chennai or 40% elsewhere.
- Sec 270A, Income-tax Act 1961 (now Sec 439)Penalty of 50% of tax on under-reported income, and 200% where income is misreported, for example through false claims.
Analysis
Pay rent by bank transfer monthly, sign a rent agreement, and make sure your parent shows the rent, for example ₹2,40,000, under house property with the 30% standard deduction. If your parent's income is low, the family may still save tax overall. Paper-only arrangements without payment can be treated as misreporting with a heavy penalty.
Conclusion
- Confirm the parent is the owner.
- Sign a rent agreement.
- Pay rent monthly by bank transfer.
- Ensure the parent reports rent income.
- Claim HRA with these proofs.
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