The Income Tax Appellate Tribunal, Delhi, while delivering a judgment recently held that the House Rent Allowance (HRA) exemption under the Income Tax (I-T) Act, 1961 cannot be denied on the ground that the assessee has paid his spouse or Wife’s rent was paid.
Apart from this, even if he is paying the rent of his parents’ house, he can also claim.
Apart from this, if the person himself is living in another house and his family is living in his own house in the native village, then he can also claim exemption on his rented house. Whereas if you live with your parents and pay rent to them then you can claim exemption under HRA.
But to claim the exemption, you must have the correct documents and also the proof that your parents are residing in that rented house. For this keep a record of banking transactions and rent receipts with you as your claim can be rejected by the tax department if they are not convinced of the authenticity of the transaction. Because earlier a similar case was dismissed by the Mumbai Income Tax Appellate Tribunal.
As per the rules, in order to claim the exemption of house rent allowance, you must have the correct documents. Also, you come under the ambit of this benefit. Under this, only the person who is salaried and is a tax payer can claim. A person carrying on his own business cannot claim under it.
How much tax exemption benefit
As per the fixed HRA, rebate can be claimed in excess of 50% of salary for living in metro cities, or 40% for non-metro cities and 10% of annual salary paid annually.