HRA Paid to Parents

[immayurpanchal]

I got to know that you can save tax by showing proof that you're living as a tenant in your parent's house. My mom is the owner of the house. I'm planning to make a rent agreement and I'll pay the 40K/month as a rent. As I live in a tier 3 city where rent is too low compared to what I pay then is it legally possible to save the tax without getting an income tax notice? I'm ok with filling my mom's ITR as she has no other income source apart from the rent she will receive.

1.1 If 40K/month is not allowed then what is the maximum amount can I pay as a rent?
1.2 Can my parents give me that money back to my account later on?

 

[17ysaurabh]

Hi @immayurpanchal
I pay Rs. 26k per month rent to my mom to save taxes.

Are you salaried?
If yes, you need to check the maximum HRA you can get.
The maximum HRA you can get is the lowest of
1. Actual HRA received by the company (check payslip)
2. Rent paid - 10% of Basic + DA
3. 40% of Basic + DA

1.1 If this value is more than Rs. 40k/month, you can pay that much rent.
1.2 I think it will be like taking money from parents. You probably need to mention it in ITR as gifts received from parents or something and it won't be taxable. Just transferring the money from the parent's account and using it may cause some trouble.
I suggest consulting with a qualified CA just to be sure.

A few things to consider:
1. Pay rent online so that it can be easily tracked.
2. Have a proper rent agreement and keep rent receipts.

 

[zacobite]

I got to know that you can save tax by showing proof that you're living as a tenant in your parent's house. My mom is the owner of the house. I'm planning to make a rent agreement and I'll pay the 40K/month as a rent. As I live in a tier 3 city where rent is too low compared to what I pay then is it legally possible to save the tax without getting an income tax notice? I'm ok with filling my mom's ITR as she has no other income source apart from the rent she will receive.

1.1 If 40K/month is not allowed then what is the maximum amount can I pay as a rent?
1.2 Can my parents give me that money back to my account later on?

allowed.. no problem..

 

[Nandita]

I got to know that you can save tax by showing proof that you're living as a tenant in your parent's house. My mom is the owner of the house. I'm planning to make a rent agreement and I'll pay the 40K/month as a rent. As I live in a tier 3 city where rent is too low compared to what I pay then is it legally possible to save the tax without getting an income tax notice? I'm ok with filling my mom's ITR as she has no other income source apart from the rent she will receive.

1.1 If 40K/month is not allowed then what is the maximum amount can I pay as a rent?
1.2 Can my parents give me that money back to my account later on?

Hello @immayurpanchal
if you file tax under the old Regime only then you can claim such a deduction. However, if you are filing tax under a new tax regime then this exemption is not allowed. hence your HRA will be fully taxable.

 

[abhimarda]

I got to know that you can save tax by showing proof that you're living as a tenant in your parent's house. My mom is the owner of the house. I'm planning to make a rent agreement and I'll pay the 40K/month as a rent. As I live in a tier 3 city where rent is too low compared to what I pay then is it legally possible to save the tax without getting an income tax notice? I'm ok with filling my mom's ITR as she has no other income source apart from the rent she will receive.

1.1 If 40K/month is not allowed then what is the maximum amount can I pay as a rent?
1.2 Can my parents give me that money back to my account later on?

Under old regime...no problem