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Tax Query

Parmod Agarwal (Assistant Manager) (394 Points)

16 February 2010

Dear All,

In the Income tax Query: House property in the Name of the wife and husband want to claim the HRA exemption on the basis of HRA receipt signed by the wife and his wife shows the HRA amount in her income. Can the Husband claim the

HRA Exemption?

Please clarify.

Thanks

Parmod

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5 Replies

CA Ankit Totla (Practicing Chartered Accountant) (469 Points)
Replied 16 February 2010

HRA is meant for salaried employees who do not own a house...!!!!

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Rachit (Analyst) (913 Points)
Replied 16 February 2010

Dear Pramod,

Tax effect will revenue neutral

You will claim deduction of HRA on wone hand and on the other hand the same amount will be taxed in your income from other sources as in come of spouse. (sec. 64 : clubbing section becomes applicable)

Padmanabhan Gopathy (Chareterd Accountant) (29 Points)
Replied 17 February 2010

Dear Mr Agarwal,

I am reproducing the section hereunder:

(13A) any special allowance specifically granted to an assessee by his employer to meet expenditure actually incurred on payment of rent (by whatever name called) in respect of residential accommoda- tion occupied by the assessee, to such extent as may be prescribed having regard to the area or place in which such accommodation is situate and other relevant considerations.]

[Explanation.—For the removal of doubts, it is hereby declared that nothing contained in this clause shall apply in a case where—

(a) the residential accommodation occupied by the assessee is owned by him ; or

(b) the assessee has not actually incurred expenditure on payment of rent (by whatever name called) in respect of the residential accommodation occupied by him ;]

There are only two exceptions in the section.

The owner is the wife and the tenant is the husband.

Will it change the position if some X is the tenant in that house? As owner of the property she would have shown the rent received in her income tax return and Mr. X would have claimed HRA in his return.

I believe the confusion arose because the transaction is between husband and wife.

G. Padmanabhan

CA Saurabh Shukla (Accounts Executive) (223 Points)
Replied 18 February 2010

If that house is purchased by your wife by her own income then only this planning is useful otherwise that income will be taxable in your hand because of clubbing provison.

Mr. Rachit for your knowledge if income clubbed, it will taxable in same head i.e in this case it will be taxable under "Income from House Property."