House rent allowance not paid earlier in current year and rent agreement commencement date

This query is : Resolved

Rajan Singhal (Querist)
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07 September 2023 1. Can we pay rent (66,667/- rs p.m.) for Apr 2023-Aug2023 in lumpsum or otherwise like separate payments for 5 months in current sept 2023 month to mother (75 yrs old) since it was not paid in respective month?

2. Can we get a rent agreement with commencement date as 1 apr 2023 on current stamp paper dated say 10 sep 2023 of rs. 100?

3. Can rent receipts be formed as per point 1 and 2 above and given to employer and will that be admissible for claiming HRA from salaries received sep 2023 onwards?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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08 September 2023 1 yes.
2 Yes , A retrospective agreement can be made legally. - You should add a clause in the agreement that the agreement deemed to have commenced from the retrospective effect, as both parties of the agreement agreed , and no party of the agreement having objection for the same .
3 yes, give current month receipt.

Saurabh Anokhchand Jain

Saurabh Anokhchand Jain (Expert)
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08 September 2023 Yes, a rent agreement can be made with an effective date of April 1, 2023, even if it is executed on a later date, such as September 08, 2023. The effective date mentioned in the agreement signifies when the terms and conditions of the agreement will come into force, and it is possible to have a delayed execution date as long as both parties agree to it.

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Rajan Singhal

Rajan Singhal (Querist)
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13 September 2023 So, Can we claim HRA exemption for rent paid in Apr 2023-Aug2023 from the HRA salaries received Sep 2023 Onwards?

My CA and other many (whom I contacted) says we cannot because I was not getting salary having House Rent allowance in those months. He also mentioned that exemption is calculated on monthly basis and not on annual basis if rent or allowance or location is not constant throught the financial year. And since few months I didnot got salary exemption will be calculated monthly basis and not yearly Gross basis hence I willnot get it for the months I was unemployed.

In Rule 2A relevant period means
the period during which the said accommodation was occupied by the assessee during the previous year

Here is Rule 2A excerpts:

"[Limits for the purposes of section 10(13A) .

2A. The amount which is not to be included in the total income of an assessee in respect of the special allowance referred to in clause (13A) of section 10 shall be—

(a) the actual amount of such allowance received by the assessee in respect of the relevant period; or
(b) the amount by which the expenditure actually incurred by the assessee in payment of rent in respect of residential accommodation occupied by him exceeds one-tenth of the amount of salary due to the assessee in respect of the relevant period; or
[(c) an amount equal to—
(i) where such accommodation is situate at Bombay, Calcutta, Delhi or Madras, one-half of the amount of salary due to the assessee in respect of the relevant period; and
(ii) where such accommodation is situate at any other place, two-fifth of the amount of salary due to the assessee in respect of the relevant period,]
(d) [***]
whichever is the least.

Explanation : In this rule—

(i) “salary” shall have the meaning assigned to it in clause (h) of rule 2 of Part A of the Fourth Schedule;
(ii) “relevant period” means the period during which the said accommodation was occupied by the assessee during the previous year.]
(iii) [***]
"
please suggest!

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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13 September 2023 Go as per the rules prospectively.