Can I Pay Rent to Wife or Parents to Claim HRA Tax Benefit?

Yes, you can pay rent to wife or parents to claim Indian HRA (House Rent Allowance) tax exemption. Paid rent is counted as spouse or parent income. File ITR.

Written by Anil Gupta
  By Anil Gupta          Updated  26 Nov, 19

  4    


Yes, you can pay rent to my wife or spouse or parents to claim HRA tax benefit in India.

In the eyes of Income tax, each individual is a separate entity and hence can have his own income.
You can pretty well pay the rent to your spouse and claim the HRA tax exemption for your income.

Rent Paid to Wife or Parents Is counted as their Income

The only thing to consider is the rent paid should be counted as INCOME for the spouse or the parents.

If your spouse or parents do NOT have any other income source, then this INCOME (rental) could be pretty beneficial. On one hand, they might not even cross the minimum income tax slab to be required to pay any tax. Currently, people with total yearly income of INR 2,50,000 need not pay any income tax.
On second hand, you are claiming tax exemption on this rental amount.

This way, the tax saving remains within the family.

You Can’t Pay rent To Your Self in Self-occupied Home

If you are staying in your home (that you own), you can’t show the rent as ‘paid’ to yourself. This is NOT allowed as per law.

Prove Rent Paid to Wife or Parent with Bank Transaction

Also, if you are paying rent to your parent or spouse, there should actually be a valid transaction (Bank payment is preferred) that shows the flow of money from your account to their account.

You also need the other documents like rent receipts and a valid rent agreement to prove rent payments.
This would be required if the income tax officer questions your intent.


Finance India
 






   4 Useful Questions & Answers from comments



  1. Tribhuvan sharma
    Tribhuvan sharma 11 Nov, 19 at 3:20 pm

    Hi, me and my wife living in Delhi on a rented property. if I show that I am giving rent to my wife to have the HRA tax exemption even if that house is not her property, will I get the HRA tax exemption.
    She is house wife and this rental income will help her to have some income and that can be shown at the time of ITR filing for her. please explain in details.
    Thanks


    • Anil Gupta
      Anil Gupta 11 Nov, 19 at 3:20 pm

      I don’t suggest to do fraud like the way you are thinking of doing. Sorry.


      • Tribhuvan sharma
        Tribhuvan sharma 13 Nov, 19 at 3:55 pm

        Thank you Anil but please also explain me the scenario in which is can pay rent to my wife or to my parents by which I could get HRA tax exemption.


        • Anil Gupta
          Anil Gupta 17 Nov, 19 at 12:06 am

          Everything is explained in above article.



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