Parmod Agarwal (Assistant Manager) (394 Points)
23 February 2010Dear All,
Our one employee has submitted the HRA receipt duly signed by his wife on revenue stamp. He has also submiited the PAN of his wife & He has paid the House rent vide cheque amount i.e. Rs. 54000/- for 4 Months. Houseproperty is the name of his wife. Can employee claim the HRA exemption?
Plz. Urgent reply.
Thanks
parmod
Amol Gopal Kabra (CA,CS,DISA)
(Practicing CA)
(8539 Points)
Replied 23 February 2010
In my opinion, rent paid to spouse is not eligible for HRA Exemption. If any contradictory view is there, or if i am wrong, please correct me.
Krishan
(Service)
(633 Points)
Replied 23 February 2010
Hi Pramod
According to my opinion it would be allowed.
As income tax department has no problem if someone is paying rent to the his spouse and the property is in the name of his spouse.
After all his spouse is showing her income as rental income.
its valid and would be allowed.
C.Balaji
(Learner)
(1867 Points)
Replied 23 February 2010
In my opinion....If the Wife shows the amount as her Rental income.....I think it is possible...
but practically Husband won't pay rent to his spouse.....- the A.O. may not accept this....
RAMESH KUMAR VERMA
( CS PURSUING )
(43853 Points)
Replied 23 February 2010
mr. agarwal ,
amol kabra ji sentiment is right.
Ratan Deep Saxena
(Asstt Manager (Accounts & Finance))
(2998 Points)
Replied 23 February 2010
If you are a salaried person receiving house rent allowance (HRA) from your employer, you are entitled for a tax deduction under the Income Tax Act. The tax implications of the house rent allowance (HRA) seem to be a confusing factor for almost every person.
House rent allowance (HRA) is a grant given by the employer to the employee to meet the cost of renting a house. It is basically a part of the taxable salary of an individual and one receives it irrespective of the type of property he resides in. Whether one stays in the rented accommodation or resides in his own house, he will get the HRA if his employer chooses to offer the allowance.
HRA Deduction
The deductions on HRA are eligible under Section 10(13A) of the Income Tax Act and will depend on certain laws. An individual can claim an HRA exemption only if the following three conditions are satisfied:
But it should be noted that one cannot claim deduction for rent paid to spouse. The relationship between a husband and wife is not commercial in nature and therefore the rent paid to spouse is not considered by the income tax authorities. On the other hand, rent paid to the parents is eligible for exemption. If you stay with your parents and pay rent to them then you can claim for tax deductions. However you need to keep all your rent receipts since it is the only proof that you are paying rent. HRA exemptions are only available on submission of rent receipts or the rent agreement.
Another factor that effects the tax exemption is the place where you live. If one resides in a metro city, he is eligible for a deduction of up to 50% of the salary or else the deduction is 40%.
regards,
ratan
Ameet
(L)
(1678 Points)
Replied 23 February 2010
You can claim exemption of HRA in respect of rent paid to your wife only under specific circumstances.
If you are an owner of the property (and that includes being a co-owner) than I am afraid you will not be eligible to claim exemption of HRA by virtue of the rental amount paid to your wife.
However, if you are not a co-owner and that is ownership lie with ur wife, and if the transaction with your wife is on an arm's length basis (i.e. you pay commercial rent and the transaction is an actual transaction and not a sham transaction) then technically-you may be able to claim the exemption of HRA by virtue of the rent paid to your wife. However, this transaction is best avoided as the I-T department is unlikely to accept that the transaction is on a commercial basis as the landlord (your wife) will be staying with you.
Rachit
(Analyst)
(913 Points)
Replied 23 February 2010
The provisions of the Act does not Prohibit payment of Rent to spouse for claiming HRA exemption.
Further the spouse would be showing it as her Rental income in her return of income.
Ameet,
I do not agree with your view that if the landlord stays alongwith the tenant, exemption u/s.10(13A) is not available. In case of Paying Guest accomodation many a times the landlord stays alongwith the tenant/s and rent paid in such a case is also eligible for exemption u/s. 10(13A).
In my opinion therefore, rent paid to spouse would be eligible for exemption u/s. 10(13A).
CA Dhaval Ganatra
(CA)
(185 Points)
Replied 23 February 2010
according 2 me it wil b allowed
however it wil b suggestd nt to enter in such transaction as it may raise questions in mind of A.O
as to whether such transaction is being enterd 4 Tax evasion purpose
personaly if i would b ur tax consultant i would say its a bit risky bt is allowd
CA.SKR
(CA; CS-Final (One Group); DISA (ICAI); Insolvency Professional)
(442 Points)
Replied 23 February 2010
| Originally posted by : ZoO ZoO | ||
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Hi Pramod According to my opinion it would be allowed. As income tax department has no problem if someone is paying rent to the his spouse and the property is in the name of his spouse. After all his spouse is showing her income as rental income. its valid and would be allowed. |
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Agree with ZoO ZoO.
Ravinder
(Sr. Accounts Officer)
(155 Points)
Replied 23 February 2010
I think it will be allowed
because according to Income tax deptt both (husband and wife) both are individual, and ur spouse is showing rent paid by you in her/his income
gautam.k.r
(PCC)
(78 Points)
Replied 24 February 2010
Hi Everyone,
For the purpose of claiming HRA exemption there is no specific prohibition as to paying rent to wife so it will be allowed. "as per my opinion"
And the main consideration as to rental income is who is the owner of the property. If legally wife has purchased it out of her own funds it must be allowed. and if there is an agreement to live apart it will be allowed i suppose!!
Is there any possibility for clubbing provisions to apply in these kind of transactions??
pradeep
(Accountant)
(39 Points)
Replied 24 February 2010
LIVE Form 10 B and Form 10BB: Handle Tax Audit Reports of Charitable Organizations(with recording)
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