1. HRA exemption: Can deduction be claimed if rent paid to parent? Find out here

HRA exemption: Can deduction be claimed if rent paid to parent? Find out here

As per the provisions of Income-tax Act, 1961, HRA exemption can be claimed only if the rent is actually paid for the accommodation occupied by you and you should not be the owner/partial owner of the property.

By: | Published: May 29, 2017 4:48 AM
HRA exemption, Income-tax Act, rent agreement, ETF, capital gains, taxability of capital gains, Gold Exchange Trade Funds, PFC infrastructure bonds HRA exemption can be claimed if the rent is actually paid. (Image: PTI)

As I live with my parents, can I pay rent to my father and claim HRA exemption?
– Atul Mishra
As per the provisions of Income-tax Act, 1961, HRA exemption can be claimed only if the rent is actually paid for the accommodation occupied by you and you should not be the owner/partial owner of the property. Also, Mumbai Tribunal in its recent judgement [Meena Vaswani v. ACIT (2017) 80 taxmann.com 2] held that the person claiming exemption for HRA shall also be able to substantiate the same through documents like rent agreement or rent receipts, bank payments reflecting payment of rents etc., electricity & water bills. Hence, you are advised to formalise a rent agreement and pay through cheque or other online modes so that record of occupation is available. Further, you father should duly reflect the rental income in his own Income Tax Return.

How will capital gains from gold ETF (holding period over 4 years) and sovereign gold bonds be calculated?
– Sanjay Joshi
As per the Income tax Act, the taxability of capital gains on sale of Gold Exchange Trade Funds and Sovereign Gold Bonds will depend upon the holding period of these assets. If the holding period is more the 36 Months(3 years) than the gain would be long term and would be taxed @ 20% (plus applicable surcharge & cess) after claiming the benefit of indexation on purchase price. Further, short term capital gain shall be added to the gross total income of the person and would be calculated as per the slab rate as applicable to an individual. This is also worth noting that w.e.f. April 1, 2016, any redemption of Sovereign Gold Bonds by government is not considered a transfer, hence no capital gain tax shall be charged on redemption.

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Do I need to pay tax on the annual interest received on 15-year PFC infrastructure bonds?
– Deepak Kaura
Investment in Long term Infrastructure Bond is deductible from income under section 80CCF up to Rs 20,000. But interest on the same is not exempt and is taxable as interest at the normal slab tax rates.

The writer is partner, Ashok Maheshwary & Associates. Send your queries to fepersonalfinance@expressindia.com

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