Can I claim HRA if I pay rent to parents?

Yes, you can pay rent to parents and claim HRA exemption. But your parents must show the rent as income in their ITR. This is a legitimate tax-saving strategy.

HRA in new tax regime?

HRA exemption is NOT available under the new tax regime. If your HRA exemption is significant, the old regime might save you more tax.

HRA Exemption — Save Tax on Rent Paid

House Rent Allowance (HRA) exemption is one of the biggest tax-saving opportunities for salaried employees who live in rented accommodation.

HRA Exemption Formula

Exempt HRA = Minimum of: (1) Actual HRA received, (2) 50% of salary for metro / 40% for non-metro, (3) Rent paid minus 10% of salary. The lowest amount is exempt from tax.

Example Calculation

Salary: ₹50,000/month, HRA: ₹20,000, Rent: ₹15,000 (Delhi). (1) ₹20,000, (2) ₹25,000 (50% of 50K), (3) ₹15,000 - ₹5,000 = ₹10,000. Exemption = ₹10,000/month = ₹1,20,000/year.

Documents Required

Rent receipts with revenue stamp, rental agreement, landlord PAN (if rent >₹1L/year). No HRA? Claim up to ₹60,000 under Section 80GG.