How To Get HRA Exemption On Rent Paid To Family Members?

HRA Exemption: Renting from your parents? Here’s how to reduce your HRA tax deductions.

Since you live with your parents or other family members and are not eligible to claim HRA (home rent allowance) exemptions, is a significant portion of your pay being withheld for taxes? Such taxpayers have the opportunity to reduce their tax burden under the Indian Income Tax Act, albeit there are some restrictions.

If a person pays rent to their family members and can show documentation of doing so. They may be allowed to claim HRA tax deductions under Section 10(13A) of the Income Tax Act while living with them.




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How can I have my family’s rent payments free from HRA?

HRA Exemption: Show evidence

For the purpose of requesting exclusions or deductions. Salaried persons must provide their employers with documentation of their rent payments in Form 12BB. This indicates that in order to make such deductions, employees must present rent receipts or a rental agreement.


Valid rent payment receipts

Your employer will want documentation such a rent agreement. Rent receipts, proof of payment, etc. before approving HRA deductions. Even though the I-T department has not established a defined list of documents that must be provided for this reason. In addition to rent receipts. You can also use cash payments that are supported by recognised sources or that can be linked to particular withdrawals from a bank account as proof of rent payment.



HRA Exemption: Details about the landlord

You must submit the landlord’s name, address. And PAN in order to claim HRA on rent paid to a family member. Only those who spend more than Rs 1 lakh in rent each year are needed to get a PAN.


Employer’s right to refuse tax HRA exemption

Your employer is entirely within their rights to refuse the HRA exemption if you don’t supply the necessary information or the proof of rent payment. You can still make the deduction, though, when you file your ITR. Be informed that the I-T Department will also investigate the situation thoroughly before approving the HRA deduction.


HRA Exemption: Family tax implications

Be advised that the rent payment you provide your family will be considered income for tax purposes under the heading Income from House Property. Additionally, the landlord must report the rental revenue in his ITR.


HRA Exemption: Litigation threat in the event of fraud

Legal action may result from claiming an HRA exemption for rent paid to parents, spouses, or other relatives. Make sure you have adequate written documentation to demonstrate the validity of the payments. The tax authorities may be able to show that the transaction was fraudulent if you formed a written agreement to pay rent without really residing at the address.






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