Here’s a quick read explaining how you can claim HRA exemption for the rent paid to parents. Congratulations! You have landed your dream job with a lucrative pay package and are eagerly wait for the salary day. But when you finally get your salary, you learn that the tax deductions are eating into your take-home salary figure. This is when you realise the importance of tax exemptions and start planning for them. One of the easiest, yet often misunderstood exemptions, is the HRA or House Rent Allowance. If you work in the same city where your parents live, then you may choose to live with them. In that case, it makes sense that you pay rent to your parents and claim the exemption on the same. However, there are a few things to keep in mind while making this claim. Want to know what they are? Read on!
When you pay rent to your parents for living in their home, they become your landlord. The Income Tax department requires proof for this. A rent agreement between you and your parents is this proof. The agreement should be signed by both you and your parents. It should contain other details, such as the premises that are rented by you, whether the payment is made monthly or yearly, and whether you make payments towards utilities as well. The document needs to be crystal clear and without any ambiguity.