22 August 2012
You can claim exemption on rent given to parents. For example, you live with your parents and pay them rent. This would technically make your parents the landlords. In such an case, one of your parents should declare the rent paid by you in his/her personal income tax return to prevent litigation in future. However, you cannot claim exemption on rent paid to your spouse. The relationship between a husband and wife is not commercial in nature and they are supposed to stay together.
You should provide your employer with accurate rent information so that the company can credit you with the eligible amount of relief before deducting tax at source. Another alternative is that you can also claim such exemption when you file the tax return and seek a refund.
22 August 2012
Dear Member, I would like to draw your attention towards section 10(13A) which entitles HRA exemption if rent is actually incurred. There is no other condition in this regard. Income tax authority has right to tax the rent income in the hands the person getting the rent but exemption can not be denied merly on the ground that the person is living in his parents house.