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Income tax

02 July 2014

Dear Sirs,

I am a retired person living in my own house.My interest income from banks is approx,75000/- per annum.My wife is working in a privatate school.She is a tax payee.To reduce her tax burden can a take a rent from her and claim HRA exemption.Please advice.

Thanks in advance

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4 Replies

Arpit Pachisia (CA) (734 Points)
Replied 02 July 2014

Hello Sir,

Yes, your wife can claim HRA exemption provided certain conditions satisfied:

1. The residential accommodation occupied by the assessee is not owned by her; and

2. The assessee has actually incurred expenditure on payment of rent (by whatever name called) in respect of the residential accommodation occupied by her;

In this case, it is important to note that to claim HRA benefits while paying rent to relatives, it is important to ensure that:

1. The above judgment won't apply in case the income from house property is clubbed in the hands of the assessee under clubbing provisions (section 64 of the Act)

2. Please ensure that the whole transaction is tax positive. Take note of average tax rate of the payee.

3. Ensure that properly stamped rent receipts are issued on a monthly basis.

4. The rent agreement is duly executed on a properly stamped paper.

5. Normally in a rented property, the electricity charges, water bill, minor repair and maintenance is borne by the tenant. Therefore, ensure that such charges are paid out of the assessee's own funds.

Thanking you

3 Like

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B S Dwarakanath (manager) (81 Points)
Replied 02 July 2014

Originally posted by : Arpit Pachisia
	Hello Sir, Yes, your wife can claim HRA exemption provided certain conditions satisfied: 1. The residential accommodation occupied by the assessee is not owned by her; and 2. The assessee has actually incurred expenditure on payment of rent (by whatever name called) in respect of the residential accommodation occupied by her; In this case, it is important to note that to claim HRA benefits while paying rent to relatives, it is important to ensure that: 1. The above judgment won't apply in case the income from house property is clubbed in the hands of the assessee under clubbing provisions (section 64 of the Act) 2. Please ensure that the whole transaction is tax positive. Take note of average tax rate of the payee. 3. Ensure that properly stamped rent receipts are issued on a monthly basis. 4. The rent agreement is duly executed on a properly stamped paper. 5. Normally in a rented property, the electricity charges, water bill, minor repair and maintenance is borne by the tenant. Therefore, ensure that such charges are paid out of the assessee's own funds. Thanking you

Can u briefly explain clubbing provisions(sec 64 of the IT act Pl)

(Guest)

Originally posted by : Arpit Pachisia
	Hello Sir, Yes, your wife can claim HRA exemption provided certain conditions satisfied: 1. The residential accommodation occupied by the assessee is not owned by her; and 2. The assessee has actually incurred expenditure on payment of rent (by whatever name called) in respect of the residential accommodation occupied by her; In this case, it is important to note that to claim HRA benefits while paying rent to relatives, it is important to ensure that: 1. The above judgment won't apply in case the income from house property is clubbed in the hands of the assessee under clubbing provisions (section 64 of the Act) 2. Please ensure that the whole transaction is tax positive. Take note of average tax rate of the payee. 3. Ensure that properly stamped rent receipts are issued on a monthly basis. 4. The rent agreement is duly executed on a properly stamped paper. 5. Normally in a rented property, the electricity charges, water bill, minor repair and maintenance is borne by the tenant. Therefore, ensure that such charges are paid out of the assessee's own funds. Thanking you

agreed

BK DUREJA (Management Advisor- Finance) (32 Points)
Replied 25 July 2014

Originally posted by : Ratan Lal

Fully Agree

Originally posted by : Arpit Pachisia

Hello Sir,

Yes, your wife can claim HRA exemption provided certain conditions satisfied:

1. The residential accommodation occupied by the assessee is not owned by her; and

2. The assessee has actually incurred expenditure on payment of rent (by whatever name called) in respect of the residential accommodation occupied by her;

In this case, it is important to note that to claim HRA benefits while paying rent to relatives, it is important to ensure that:

1. The above judgment won't apply in case the income from house property is clubbed in the hands of the assessee under clubbing provisions (section 64 of the Act)

2. Please ensure that the whole transaction is tax positive. Take note of average tax rate of the payee.

3. Ensure that properly stamped rent receipts are issued on a monthly basis.

4. The rent agreement is duly executed on a properly stamped paper.

5. Normally in a rented property, the electricity charges, water bill, minor repair and maintenance is borne by the tenant. Therefore, ensure that such charges are paid out of the assessee's own funds.

Thanking you

Fully agree