HRA exemption to Spouse

This query is : Resolved

Prakash Joshi (Querist)
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13 April 2023 Dear Friends,
Can anyone please give a considered views on the following.

A and B are husband and wife and are directors & promoters in a company. They are taking a house on rent for residential purpose. The landlord says lease can be in any one name of the spouse(not joint name or not even in company name).

Under these circumstances, I want to know if the lease is made in one name either husband or wife can they both equally claim HRA against it as they both will stay there and rent will be paid from their joint account and both are working for one company. Auditors says only one in whose name the lease is can claim HRA not the both but I want to have one more opinion .

Secondly, as they will be doing working from home can they claim expenses relating to office like electricity, staff salary, staff welfafre etc. though it's not a company/commercial lease

CA friends can please advise.

Thanks

PC Joshi

CA Sanat Pyne

CA Sanat Pyne (Expert)
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13 April 2023 In the scenario described, if the lease agreement is made in the name of only one spouse (either husband or wife), then only that spouse would be eligible to claim HRA (House Rent Allowance) as per the provisions of the Income Tax Act. The other spouse would not be eligible to claim HRA as they are not a party to the lease agreement. However, if the lease agreement is made jointly in the names of both spouses, then both spouses would be eligible to claim HRA based on their respective share of rent paid.
Regarding the expenses related to working from home, if the house is being used as a residence as well as a place of work, then it may be possible to claim a deduction for certain expenses such as electricity, internet, and telephone charges, as per the provisions of the Income Tax Act. However, the expenses related to staff salary and welfare would not be eligible for deduction as they are not directly related to the use of the house as a place of work.