Can you claim tax benefit on HRA for rent paid for dependent parents?

Updated: September 25, 2019 7:44:55 AM

Any HRA allowance granted to meet the expense incurred on payment of rent in respect of residential accommodation “occupied” by the individual is exempt from tax, subject to the prescribed limit.

Any sum of money received from relatives is fully exempt from tax in the hands of the beneficiary. Any sum of money received from relatives is fully exempt from tax in the hands of the beneficiary.

By Chirag Nangia

I am paying two rents – one in Delhi (for myself) and the other in Mumbai (for my parents). My company has provided HRA only for the rent paid by me in Delhi. Can I also claim HRA on the rent paid by me for my dependent parents who stay in Mumbai?
– Chaynika Agarwal
Any HRA allowance granted to meet the expense incurred on payment of rent in respect of residential accommodation “occupied” by the individual is exempt from tax, subject to the prescribed limit. Exemption of HRA is not permissible on payment of house rent occupied by the dependents. Hence, you shall not be allowed to claim HRA on rent paid by you for your dependent parents in Mumbai.

My wife has received gift of Rs 1 lakh from my mother. Will it attract any gift tax?
—O P Khandelwal
Any sum of money received from relatives is fully exempt from tax in the hands of the beneficiary. Mother-in-law is treated as relative under I-T Act. Hence, the amount of Rs 1 lakh received by your wife from your mother shall be fully exempt from tax. However, your wife shall be required to disclose the exempt gift amount under the schedule ‘Exempt Income’ in the Income Tax Return form.

Recently I became an NRI. I have PPF and Sukanya Samridhi account. Can I continue to operate these accounts? I have a demat account and mutual fund investments. Can I continue them?
—Nitin Nikas
Non-resident Indians (NRIs) cannot invest in PPF scheme. However, if resident-ial status changes to NRI during currency of maturity period of PPF account, he is eligible to continue his PPF account till its maturity. Sukanya Samriddhi Account shall not be operated upon change of residential status of the account holder. Intimation to this effect has to be given by the guardian or the account holder to the post office or the bank within a period of one month from the date of such change of status of the account holder’s citizenship or resident status. Subsequently, no interest shall be deemed to accrue to the account from the change of such status and the account shall be deemed to be closed prematurely from that date. The beneficiary is eligible to claim the benefits of the scheme till she remains a resident Indian citizen. An NRI can continue to hold the securities which he/she had purchased as a resident Indian, even after he/she has become an NRI, on a non-repatriable basis.

The writer is director, Nangia Advisors LLP. Send your queries to
fepersonalfinance@expressindia.com

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