House Rent Allowance

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This discussion explores whether House Rent Allowance (HRA) can be claimed when a property is leased. Generally, HRA is claimable if rent is actually paid for the period of stay, even on a leased property, provided the lease agreement doesn't constitute ownership transfer or a finance lease where instalments are paid. If it's a simple lease for a fixed term with a one-time payment, and the property reverts to the owner, HRA can typically be claimed.

Nimitha Kundanam

Nimitha Kundanam (Querist)

01 January 2020 Dear sir,

If client is staying in Leased property, can't we claim HRA by calculating interest at bank FD rates? or something like that?

Kindly suggest.

Zeal Bangdiwala

Zeal Bangdiwala (Expert)

02 January 2020 you are paying installments for a finance lease which at the end of the period ownership transfers to you. The basic element of Rent is missing. So HRA cannot be claimed in this regard.

Nimitha Kundanam

Nimitha Kundanam (Querist)

02 January 2020 Dear sir,
It is actually lease property where client doesn't pay any instalment, it is only one time payment and after lease period property goes to the owner. In such case can assessee claim HRA.

Zeal Bangdiwala

Zeal Bangdiwala (Expert)

02 January 2020 If it is for one financial year than yes you can claim.. the condition is rent should have been actually paid

Nimitha Kundanam

Nimitha Kundanam (Querist)

02 January 2020 Dear sir,

Lease period is 5 years. Lease amount is paid in 2018 and property can be used till 2023. Can we claim HRA?

Zeal Bangdiwala

Zeal Bangdiwala (Expert)

03 January 2020 Yes you can claim HRA.

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