Exemption of HRA Claim

[Lav Prajapati]

I would like to seek clarification on following issue

1. whether the location of the rented accommodation is mandatory to be in the same city as the company location for the purpose of HRA claim.

2. For claim exemption of HRA, we can pay rent our parent.

[TANAY GHILDIYAL]

The house for which you are paying rent should be in the same city as the place of location of your job. If it is in 2 different cities , exemption cannot be claimed ( even if your parents are showing that income in their returns).

Yes, in case you are paying rent to your parents and you have a formal lease agreement, then you are eligible to claim HRA. 

Tanay Ghildiyal 

9873938771

[K.lakshmipati rao]

House Rent Allowance (HRA) is exempt u/s 10(13A) of I.T. Act and Rule 2A of I.T. Rules, subject to  that the rented premises must not be owned by Assessee and, on actual payment of rent regularly on monthly basis for the house [which he occupies by reason of the fact that owing to his employment] resides at other place in a building not belonging to him.

Exemption is also available even if the rented house is owned by his/her parents, subject to actual payment of rent regularly on monthly basis [through bank transfer entry for evidence] and collect a receipt for HRA claim [Refer to Bajrang Prasad Ramdharani Vs. CIT - 2013 (8) TMI 103 - ITAT AHMEDABAD. However, similar rules don't allow against payment of rent to spouse and claim a tax exemption.

[Lav Prajapati]

@TANAY GHILDIYAL

Can you provide any reference in respect of like instruction, press release, notification , circular etc. ?

[K.lakshmipati rao]

I would like to draw your attention to read I.T. Rules,1962-Rule 2A [2* Limits for the purpose of Section 10(13A)] -at Page 1.2 and, Taxmann's Direct Tax Ready Reckoner- Para13.1 in Page No.A-24, for ready reference.

AI Summary

House Rent Allowance exemption applies only for accommodation at the place of employment; genuine tenancy to parents may qualify. HRA exemption under Section 10(13A) read with Rule 2A applies only where the rented accommodation is occupied at the place of employment; if the accommodation is in a different city than the job location, exemption is not available. Rent paid to parents may qualify if supported by actual monthly bank payments, receipts and a formal lease evidencing genuine tenancy.