House rent allowance: Tax exemption can be claimed on rent paid to parents

Prepare an agreement, pay rent into their bank accounts, and ensure they pay tax on it

Bindisha Sarang
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Salaried individuals who opt for the old tax regime, live in rented houses, and have the house rent allowance (HRA) component in their salary are eligible for HRA tax exemption under Section 10 (13A) of the Income-Tax (I-T) Act, 1961 provided they are able to meet certain conditions. This exemption is not available under the new tax regime from assessment year 2021-22 onwards.

Let us examine a few grey areas where it is not immediately apparent if a taxpayer is eligible for this exemption.

Living on rent while owning a home

Normally, if you pay rent for accommodation, you get tax exemption on HRA. Archit Gupta, chief executive officer (CEO), Clear. in, says, “The caveat is that the house you live in and the house you own should be in different cities.”

Sometimes, however, people have a property in the same city and yet live in rented accommodation. In such a

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First Published: Feb 27 2023 | 8:06 PM IST

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