Unlocking HRA Benefits While Staying at Your Parents' House


Many are unaware that even while residing at their parents' house, individuals with salary income can leverage House Rent Allowance (HRA) benefits under Section 10(13A) of the Income Tax Act, 1961. Here's how you can maximize this allowance!

Understanding HRA Provisions:

Under the Income Tax Act, individuals above the age of 18, not dependent on their parents, are considered separate taxpayers. Consequently, HRA calculation varies based on individual income.




Claiming HRA While Staying with Parents:

To avail of HRA benefits while residing with your parents:

1. House Ownership: The house must be owned by your parent(s), to whom you pay rent, establishing a landlord-tenant relationship.

2. Rent Payment Proof: Direct bank transfers or cheque payments to your parent(s) serve as evidence for claiming HRA exemption.

3. Rent Agreement: Enter into a formal rent agreement with your parent(s) to legitimize the arrangement.

4. Parental Tax Implications: Rental income received by your parents is taxable under 'income from house property.' They can avail of property tax deductions and a 30% standard deduction.

5. Tax Benefits Calculation: The HRA exemption amount is the least of: actual HRA received, 50% (metro) or 40% (non-metro) of basic salary + dearness allowance, or rent paid minus 10% of salary.


Tax-Saving Scenarios:

- If your parents fall into a lower tax bracket, the family can save tax collectively.

- Elderly parents (above 60) enjoy higher exemption limits, further reducing tax liabilities.

- HRA benefits are unavailable under the New Tax Regime but can be claimed alongside home loan deductions for principal and interest payments.


Key Considerations:

- Only individuals with salary income can claim HRA.

- HRA cannot be claimed if the house is owned by the spouse.

- Section 80GG allows deductions for those without HRA in their salary or self-employed individuals.


Harness the full potential of HRA benefits even while residing at your parent's house. Consult Taxhelpdesk today to optimize your tax-saving strategies!


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