Salaried should Know if Rent Paid to a Relative can be claimed as HRA? Two Conditions and Proof need as evidence!
Also cases in which you cannot claim!
A thread 🧵
Also cases in which you cannot claim!
A thread 🧵
To claim HRA, the employee must meet following conditions:
· Employee must be a salaried individual and receive HRA
· Employee must be paying rent for a residential accommodation he/she occupies
· Employee must not own residential accommodation for which HRA is being claimed
· Employee must be a salaried individual and receive HRA
· Employee must be paying rent for a residential accommodation he/she occupies
· Employee must not own residential accommodation for which HRA is being claimed
The exemption on HRA is calculated as minimum of the following three amounts:
1. Actual HRA received from employer
2. Rent paid minus 10% of basic salary
3. 50% of basic salary if employee lives in a metro city or 40% of basic salary if the employee lives in a non-metro city
1. Actual HRA received from employer
2. Rent paid minus 10% of basic salary
3. 50% of basic salary if employee lives in a metro city or 40% of basic salary if the employee lives in a non-metro city
Can rent be paid to a Relative including wife and mother?
In Abhay Kumar Mittal vs. DCIT [2022] 194 ITD 224 (Del Trib.)
Salaried had paid rent to wife, house was registered in the name of wife and wife had own sources to buy the house...
In Abhay Kumar Mittal vs. DCIT [2022] 194 ITD 224 (Del Trib.)
Salaried had paid rent to wife, house was registered in the name of wife and wife had own sources to buy the house...
...Assessee has paid rent and rent income is offered to tax as ‘income from House Property’ in the wife’s income-tax return. ITAT stated that the Revenue’s contention that husband cannot pay rent to the wife “is devoid of any legal implication”
Husband can pay Rent to Wife
Husband can pay Rent to Wife
Further in Bajrang Prasad Ramdharani vs. CIT [2013] 60SOT 66 (Ahd Trib.)
The Assessee had paid rent to wife, ITAT noted thathouse is owned by wife, assessee and his wife are living together (thus, Assessee has occupied the house)....
The Assessee had paid rent to wife, ITAT noted thathouse is owned by wife, assessee and his wife are living together (thus, Assessee has occupied the house)....
....Assessee has submitted rent receipts and rent is duly paid through bank transfer. ITAT opined that “the assessee has fulfilled twin requirements of the provision, i.e. occupation of the house and the payment of rent” and is thus entitled to claim exemption u/s 10(13A)
Mrs. Meena Vaswani vs. ACIT [2017] 164 ITD 120 (Mum Trib.) –
The Assessee paid rent to mother. Assessee failed to any produce evidence such as Leave and license agreement, Payment through the bank, etc ....
The Assessee paid rent to mother. Assessee failed to any produce evidence such as Leave and license agreement, Payment through the bank, etc ....
....Mere submission of affidavit and rent receipts from mother not sufficient. Inspection by Department also disproved claim of Assessee. Hence ITAT disallowed the HRA exemption to the Assessee
From the above case laws it is very clear that only following two conditions needs to be satisfied
1) The employee must be paying rent for a residential accommodation he/she occupies.
2) The employee must not own the residential accommodation for which HRA is being claimed.
1) The employee must be paying rent for a residential accommodation he/she occupies.
2) The employee must not own the residential accommodation for which HRA is being claimed.
To prove following act must be done
1) Make Leave and License Agreement and rent receipts
2) Make Rent payments – preferably other than cash
3) The relative should disclose rental income in his or her ITR
1) Make Leave and License Agreement and rent receipts
2) Make Rent payments – preferably other than cash
3) The relative should disclose rental income in his or her ITR
Loading suggestions...