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Anand

Wednesday, July 31, 2013

Everything you ever need to know about House Rent and Income Tax

One of the biggest points for confusion for most of us is about the Income Tax Aspects surrounding our House. Whether you live in a rented house or own a house that is rented out, there are significant Income Tax Implications. The purpose of this article is to explain these topics and clear things for you.

For People Living in Rented Homes:

If you live in a Rented House you are eligible for something called House Rent Allowance and this has tax benefits. If you check out your salary package closely, the will be something called "HRA" or "House Rent Allowance" that is part of your monthly salary along with other components like Basic Salary, Provident fund etc. If you dont have HRA as part of your salary, you need to discuss with the finance department of your office and make sure to allocate a decent chunk of your salary into the HRA Bucket.

Lets assume you have HRA as a salary component. So the next step is to calculate the taxation aspect of the HRA Component. In order to do this, you need the following:

1. Your Basic Salary
2. The Actual HRA Component in your Salary
3. The Actual Rental paid every month
4. Whether you live in a Metro or a non-metro

Once you have these details, try to calculate the following numbers:

1. If you are in a Metro - take 50% of your Basic salary and if not, take 40% of your Basic Salary
2. The Actual monthly HRA component from your salary
3. The Actual Rent paid - 10% of your Basic Salary

Of these 3 figures whichever is the least is your eligible tax deduction against HRA.

For ex: If your Basic Salary is Rs. 40,000 per month and you live in Chennai. Your actual rent paid every month is Rs. 20,000 and the HRA Component in your salary is Rs. 22,000. In such a case, how will you compute HRA?

1. Since you are in Chennai (Metro) you get = Rs. 20,000
2. Monthly HRA Component = Rs. 22,000
3. 20,000 - 4000 (10% of 40,000) = Rs. 16,000

So, among these 3 components, Rs. 16,000 is the least and hence you can claim HRA Exemption of Rs. 16,000 every month. This means Rs. 1,92,000/- will be deducted from your total annual income for tax calculation. So, lets assume your total annual salary was Rs. 7.5 lacs, after considering the tax deduction for HRA your net taxable salary is only 5.58 lakhs.

Some Questions from People Living in Rented Homes:

After reading the above example, I am sure you will have many questions. I have tried to answer some of them below:

1. Can I claim HRA if my own house is still under construction?

Yes, you can. As long as you are paying a rent to someone (and have proof for the same) you can claim HRA

2. My house owner doesnt give me any receipts. What can I do?

A simple rental agreement written on white paper and signed on a Rs. 1/- revenue stamp affixed in the letter should suffice. The actual rent paid and the person to whom it is paid must be clearly mentioned in the letter.

3. My owner is refusing to sign the agreement. What can I do?

Your owner is refusing because if he signs this agreement, he needs to show this as income for his taxes and hence is trying to escape. You need to explain to your owner before you occupy the house that you wont take the place unless he signs the rental agreement. If he doesnt sign, you cant get tax benefits even though you are actually paying the rental money

4. I am a bachelor. Can I show as if I am paying rent to my mom or dad?

Sure you can. However, your mom or dad will have to show this rent you are paying as an income for their taxation purposes.

5. My wife is a house wife. Can I show as if I am paying rent to my wife?

No, you cannot pay rent to your spouse. It is not allowed as per Indian tax laws.

6. Can I Pay Rent to my Mom or Dad and claim HRA Benefits?

This is a tricky question. Legally there is nothing stopping you from doing this but this is a concept that is frowned upon because effectively this amounts to cheating. In real life - would we really pay rent to our mom or dad? 

Anyways, if you insist on going this route, you need to understand that if your tax returns get audited in future, you would have to answer the tax officials on why you claimed as if you are paying rent to your own parents plus prove that you actually paid rent. Otherwise - the penalties you will pay and the consequences would be much worse than the few thousand rupees of tax you will save. 

If you wish to go this route - as a first step, you would need to apply for a PAN Card for your mom or dad (on whoever's name you want to pay rent). Only the person on whose name the house is registered can receive rent. If your father is employed and owns the house but you want to show rent to your mom who is a house wife - that is not allowed. After this you would have to sign a rental agreement on stamp paper and register the same for the amount of rent that is nominal for your area plus the size of your room. Once done, you must make sure to formally transfer the rent to your parents account plus ask them to issue a rent receipt so that you can use the same for tax filing purposes. 

For People who Own a House that is Rented Out

If you are someone who has rented out your house, you need to show that rent as an income along with your other sources of income. The taxation of your rental income depends on whether you have a loan running against this rented house or you own it fully. The amount that is considered for taxation could either be the Notional Rental for that area or your Actual Rent whichever is higher.

Option 1: Owned fully

In this case, if you receive a rent, 70% of the rent must be shown as income in your records. For ex: If your monthly rent is Rs.20,000/- you can deduct 30% of it as expenses incurred in maintaining the house & other charges. The remaining Rs. 14,000/- you need to show in your income.

So, let us say your annual salary is Rs. 5 lakhs from your employment, your total taxable salary will be Rs. 6,68,000/- (After including 1,68,000 of Rental Income)


Option 2: Have a Home Loan Running

In this case, the interest component of your loan is totally deductible from the rent you receive. Let us go back to our above example. You are receiving a rental of Rs. 1.68 lakhs as income. In case a home loan is running for this house where the interest you paid last year was Rs. 1.18 lakhs, you can deduct this from the rental income and show only Rs. 50,000/- as the net income because technically you are offsetting the interest & your rent.

Remember - You can only consider the interest component of your home loan EMI for this deduction and not the principal.

Nowadays, due to high property prices, in almost all cases, the interest amount far exceeds the rentals. Investors generally buy properties for the capital appreciation side of Investment and leave it out on rent so that the asset does not remain idle and is maintained properly.

Some Questions from People Owning Rented Homes:

1. What is Notional Rent?

Notional Rent is the guideline rental price that the government will consider for all its calculations. Technically this is the minimum price at which you are expected to rent out your house.

2. What if the Notional Rent is higher than the Actual Rent?

In the rare case that the actual rent you get is lower than the Notional Rent, you still need to consider the notional value for tax purposes. Remember the example above? In case your actual rent is only Rs. 15000/- whereas the Notional rent for your area is Rs. 20000/-, for all taxation purposes Rs. 20000/- only will be considered

3. My Rent this year was much lower than the Interest I am paying the bank on the home loan. Is there anything that can be done to help this situation?

Well, for rented properties, the entire amount of interest payable can be adjusted against the rent and any amount that is left over may be carried forward in the tax return as loss from property to the next year. This is very important from a tax planning point of view. Such carry forward of the unabsorbed interest can be done for a continuous period of eight years.

So, as years go by and the loan gets paid off, the interest component that is getting set-off against the rental income each year will keep on reducing. On the other hand, typically, the rent would tend to increase each year or at least once every 2-3 years. This will go on to lead to a positive differential between the rent received and the interest paid and this difference would be taxable. At this point, the carried forward interest will be extremely useful to reduce tax liability.

Remember - If you wish to carry forward loss, it is mandatory to file the tax return by July 31 (for individual taxpayers). Without filing the tax return by the due date prescribed this carry forward of loss will not be allowed.

4. This carry forward calculation seems complicated. What can I do?

Contact a tax advisor or a chartered accountant. They will charge you a small fee and do this for you without much hassle to you.


I hope this article answered all your major queries abut house rent from both the owners perspective and the tenants perspective. If you have any further queries, leave a comment below and I will try to answer them...



195 comments:

  1. I work in bank of maharashtra. I use to pay house rent 8000/- per month but i am getting HRA only 942/- per month in my salary. My basic is 14500/-. Can i claim tax banafit. Please reply soon.

    ReplyDelete
    Replies
    1. Yes you can claim HRA but it will be capped to Rs. 942 per month because that is the lowest of the 3 possible components. However, there are other tax exemptions and deductions you can avail. Check out my book on indian income tax for more details. See here: http://anandvijayakumar.blogspot.com/p/books-by-this-blog-author.html

      Delete
  2. Hi Anand,

    Here is my situation.
    I am staying in a rented house whose real owner is the husband.
    But as per rental agreement the owner is wife and I am supposed to put rent to her account.
    Later husband and wife separated. Now both wants rent to be transferred to their account.

    Wife’s reason : we have an agreement
    Husband’s reason : I am the real owner.

    Husband is ready to make a new agreement. He will also add in the agreement , that he has collected the advance amount. (actually it was collected by wife).
    Can I make a new agreement with husband now ?
    Can wife move legally against me since she has the agreement that I made which is up to Nov 2015 ?

    ReplyDelete
    Replies
    1. You better consult a good lawyer first. This is a complicated legal matter.

      Firstly, as far as I know, a legal contract/agreement for receiving rent is only binding if the person with who you signed is the actual owner of the house (full or part). By virtue of being the wife, she would have claim to half the property as long as she was married. But, now that they are separated I dont think she can stake any legal claim on the property. So, rightfully the money should be paid out to the husband.

      Anyways, as a tenant, you are at the receiving end of the problem and should consult a good lawyer because at the end of the day, you have to pay the rent to either party and if both are pressurizing you, going to a lawyer is your only option.

      Delete
  3. Hi , I have flat where i am mail owner and my father is a co owner. There is no home loan pending. my father is retired and does not own any other house. Can I pay rent to my father and claim HRA for same.

    ReplyDelete
    Replies
    1. Hi Anand Ji,

      Please clarify my query on an urgent basis -

      I am have paying my housing loan and its a joint loan is taken in the name of Me and my Wife ( who is also working). Now for Tax exemption, I am declaring the entire home loan amount for my salary to exempt and nullify my tax amount. But my wife also has a tax amount which is been calculated based on her salary to be deductible.

      So to waive off this, Can my wife submit the Rent receipt separately to zero her tax amount. Is this advisable or if done then what would be the consequences.

      Delete
    2. Hi,
      How can someone pay rent for a house which they jointly own with their husband? Doing so would be considered ILLEGAL and you can be fined heavily and depending on the amount of tax evasion, you and your wife may even be jailed. You have 2 options

      1. Share the home loan EMI Amount and then gain tax benefits on a 50-50 kind of basis with your wife so that both of you can save some tax
      2. Consider other tax saving options for your wife. See my book on indian income tax - http://anandvijayakumar.blogspot.sg/p/books-by-this-blog-author.html

      Delete
  4. Hi, I am staying with my mother in a rented house. The agreement with the landlord is in my mom's name. The rent is 5500.
    The landlord is ready to give the agreement but not ready to give rent receipts fearing it will be accounted for him.

    Can I make an rental agreement with my mom (as original agreement is with her name) and show that I am paying the rent to her (I am paying to her, she is paying to landlord). If so I can get proper rent receipts also from her.
    Mom don't have any other income.

    ReplyDelete
    Replies
    1. no, you cannot for two reasons.

      1. You cannot pay rent to your mother because you are mom and son
      2. unless the original rental agreement says she has the rights to sub-let the house, she cannot even rent out the house to someone else. She is a tenant and subletting without the owners permission is considered illegal

      Delete
    2. Alternately - you can get the rental agreement rewritten in your name and claim HRA benefits

      Delete
  5. Hi Anand,

    Here is my situation. Will you provide your valuable suggestions :
    1) My wife & I are joint owners of a flat, for which we have taken home loan but i am paying 100% EMI of that loan.
    2) We have let out that flat while we are living in other rental house, and i will be claiming HRA for that.
    3) I will be getting tax benefits of my home loan.

    Now, the agreement for my let out flat is on both & mine name, Now is it possible that i show the rental income in my wife income instead of mine as i will be proving PAN number of wife to my tenant for him to claim his HRA.
    Please suggest.

    ReplyDelete
    Replies
    1. The person who is claiming the tax benefits on the house should be the one who should include the rent in his/her income. If you want the tax benefit on the home loan, you have to give your PAN number and show the rental income in your tax returns.

      Delete
  6. I have started construction of my home in 2013 and have borrowed a 40 lakhs as home loan for the same. I took the possesion of this home in April, 2014. This is my first home and is self-occupied. I am staying in the ground floor and first & second floor are rented out.

    1) I receive a rent of 24,00 per month and planning to declare as my rental income.
    2) i pay 38 thousand as my emi every month against my home loan
    3) I have paid 3.87 laksh as home loan interest and 70 thousand as prinicipal for the FY 2014-15
    4 ) i have paid pre-emi during construction of the home. I have paid 3 lakhs as home loan interest during FY 2013-14. This interest i have not claimed during FY 2013-14 as i have not taken the possesion of the home.

    My questions:

    1) Can i claim the entire home loan interest paid as i am showing the rental income in my tax returns?
    2) Can i clam the entire 3.87 lakhs which i have piad as home loan interest for the FY 2014-15?
    3) in addition to point (2) can i also claim 60 thousand (1/5th of 3 lakhs) of home loan interest which i paid during FY 2013-14 as pre-emi.
    4) Hence the total Home loan interest of 3.87 lakhs + 60 thousand = 4.47 lakhs can be claimd as exempt for the FY2014-15. Is my calculations correct?

    ReplyDelete
    Replies
    1. Answers:
      1. No, you cannot. As there are actually 3 floors of which 1 is self occupied and 2 are rented out, you cannot claim full interest exemption. The part which is for your house should be appropriately adjusted.
      2. As I just said for Q 1, no you cannot claim full 3.87 lakhs.
      3. The pre-emi should be claimed during the year it was paid. I dont think you can claim interest paid last year in this years tax returns
      4. No, the calculation is not correct. the 60 thousand principal exemption under section 80c is correct. But, 3.87 fully will not be exempt.

      Note: If all the 3 floors were rented out, then Yes the full interest 3.87 will be exempt from tax.

      Please consult a good chartered accountant or tax consultant. They can help you sort this situation out and pay the appropriate amount of tax

      Delete
  7. Hi,

    Your site is very informative.

    1. I have taken a loan in june 2014. The property is in Noida. My office is in gurgaon and i am staying in rent oin Noida. I will get possession in Feb 2015. I will not stay in my new flat till may 2015(it will vacant till may). Can i claim both HRA and interest 24B deduction? If yes then do i need to show nominal rent from feb 2015 to mar 2015 ? My office needs only interest certificate nothing else.
    2. Can i claim 80C deduction from loan principal amount?
    3. Can someone show rent to his brother if he is staying brother house ? Brother will file the return.

    ReplyDelete
    Replies
    1. 1. Once the house is actually handed over by the builder, and both houses are in the same city, you cannot claim HRA and home loan tax benefits. It is either of the two after that date.
      2. Yes, you can (but HRA Cannot be claimed)
      3. technically yes. but, a proper rental agreement has to be signed, transfer of money between your accounts has to happen and tax returns have to be filed by your brother. IF so - yes you can do that

      Delete
  8. Hi,

    I have rental agreement in name of my husband, is it wife can submit the same for tax exemption?


    ReplyDelete
    Replies
    1. No. The clam can only be made by the person who has signed the agreement

      Delete
  9. Iam living in a rented house and paying monthly rent to a person. But this person is not the owner of the flat but he has taken this flat as a lease and gave to me for rent. It is subletting. the owner of the property is someone else and the rent iam paying to is a different person.

    Now, How can i get the HRA exemption. who has to sign the rent reciepts. The person whom iam paying rent every month is ready to sign and give pan card. But still he is not the real owner. Iam confused. please help.

    ReplyDelete
    Replies
    1. The rent receipt has to be signed by the person to who you are paying the rent. Subletting is fine as long as the guy doing it has informed the land lord of the same and is giving you a proper rent receipt that shows his PAN number.

      Delete
    2. There is no sub lease clause in his lease agreement.. Word of mouth informing is enough? Or any stamp paper is needed to be signed by the owner for allowing sub leasing ?

      Delete
    3. No, word of mouth will not be enough. A proper signed agreement should be required.

      Delete
  10. Hello, I have never paid tax before on 2 properties I own in Mumbai from last 13 years. For some period, they were not rented and just kept closed. Now from last 5 yrs, we are renting it out. My question is if I suddenly start paying tax from this yr, will the IT department doubt, dig out and make me pay lot of penalty?
    The agreement for both properties is going to be renewed from March. Can we escape saying that we just have started renting them out from March 15.
    Also I am a disabled person with more than 90% severe disability from past 12 years (I am 30 yr old now). Will that help somehow in getting some exemption?

    ReplyDelete
    Replies
    1. Hi, some points for you
      - Yes, when you start paying taxes now, the obvious question would be - oh how come this guy dint pay taxes in the previous years and yes there is a probability that you may be asked to pay past tax dues as well
      - If you claim the house is just rented out from march 2015 and if by chance it is found out that the house has been rented out for many years, you will be in a lot more trouble than what you would be - if you willfully declare the past years taxes and pay them now
      - Being disabled actually gives you additional tax rebates/benefits but beyond that, you would be consider equal to every regular citizen. If you do not pay your taxes in time, you are liable to be punished.

      I would recommend 2 things:
      1. Read my book on Indian Income tax and understand the different tax provisions you can use to save your taxes. http://anandvijayakumar.blogspot.sg/p/books-by-this-blog-author.html

      2. Consult a good chartered accountant/tax filing service and they can help you file your past year tax returns

      Delete
  11. Hello,

    I want my wife to avail HRA against the rent agreement that I have on my name (as I don't), what's the way to do this? Adding her name to the rent agreement against mine will suffice? If so, what's the process of doing that?


    -Anon

    ReplyDelete
    Replies
    1. The person who has signed the rental agreement is the one who can claim the tax benefits (both from a tenant and owner perspective). IF you want your wife to claim the HRA, you should ask your owner to sign a new rental agreement with your wifes name and then she can claim the hra

      Delete
  12. Hello Anand

    Thanks for the useful article.

    There is one query I had related to rent receipts. My flat owner, who lives abroad, has sent me attested copy of his PAN card and asked me to get the rent receipts signed by someone on his behalf. Is this ok? Great if you can guide at this and tell me if there is anything I need to keep in mind while doing this. Thanks again.

    Regards

    Amit

    ReplyDelete
    Replies
    1. Hi Amit - Pls see this. http://anandvijayakumar.blogspot.sg/2014/04/an-nris-guide-to-rental-income-in-india.html

      No, I dont think this, ask someone else to sign on his behalf thing will work.

      Delete
  13. Hello Anand
    I jointly own with my wife a single house in Mumbai which is rented out. Is the rented income from the only house exempt from income tax ? The rent agreement is signed by me and the rent is being collected by me alone. Would you please inform who will be liable to pay income tax?
    Thanks
    Mohan

    ReplyDelete
    Replies
    1. Mohan,
      Irrespective of whether it is your only house or you own multiple houses, if a house is let out on rent, you are liable to pay income tax on the rent you receive from the house. This rent income should be added to your income from other sources (job/Salary, bank interest etc) and you have to pay tax on the total income.

      If the rental agreement is in the name of either of the two joint holders (husband or wife) the person on whose name the agreement is registered (the person who is getting the rent) has to pay tax on it.

      Delete
  14. Hellow Mr. Anand,
    I vinod working & leaving in Nasik, having house on rent in the same. Having rent agreement with my brother, to whoom I paid rent to every month.
    I need to take HRA beniffit in my tax return, but at the same time my brother dont want to show the perticular income on his account.
    So kindly give me guidlines how I take the same beniffit.

    ReplyDelete
    Replies
    1. Hi,
      Firstly - paying rent to your own blood brother is not considered a good idea as you may have a lot of explaining to do to the Income Tax Authorities. Anyways - if you insist on going this route, you have to make sure to sign a rental agreement and transfer the rent every month to your brothers account. He has to pay tax on that money. If he is willing to do that, then you can claim HRA.

      You cannot claim HRA without the home owner paying tax on the rental income

      Delete
  15. Hello Anand, I have one house in my native where my parents live and I have bought another house recently in bangalore where I work. I have already closed the loan for my home in native and it is fully owned now. In order to avoid notional rent on that, Can I transfer it to my wife via a registered gift deed? Thanks, Arul

    ReplyDelete
    Replies
    1. Arul - Firstly I dont think you can do this because she is your wife. Anyways, even if it is legally possible to transfer the house to your wifes name using a gift deed, you may still have to pay tax on the notional rent on that house (assuming your wife is a house wife). If she is working, she would have to pay tax on the notional rent.

      Delete
  16. Sir,
    If I give power of attorney to a person to manage my house and that person does not have to send me the rental income ,does that income attract IT provisions on the POA or me.
    Please clarify this issue. Thanks for dealing many topics.

    ReplyDelete
    Replies
    1. Ideally it should be you. The person with the power is acting on your behalf and hence you need to pay tax on the income generated from your house.

      Anyways - This is a complicated situation and I am not 100% sure of the answer. So, better consult a good chartered accountant or tax consultant

      Delete
  17. Hello Anand, I am working in kashmir and my company is giving a facility to draw additional HRA for family. My father is pensioner and mother is house wife, My question is Can I avail additional HRA because my father is pensioner and not receiving HRA in pension........

    ReplyDelete
    Replies
    1. Are your parents living in a rented house? If so - Yes I think you can. But, just remember that the tax liability on this additional income falls on you and not on your father.

      Delete
  18. Hi Anand,

    I and my family live with my mother (widowed) in a flat that is in her name.
    Till the last financial year, I used to show that I pay rent to her.
    However, since this month, I have given my own flat, which is in the same apartment complex, on rent.

    I want to know if there is any way I can show my income from rent and also continue to claim HRA tax benefit for the rent that I am paying to my mother.

    ReplyDelete
    Replies
    1. Firstly - paying rent to your own Mother is not advisable and if there are any future inquiries into your tax records, you may be forced to answer a lot of questions and will be asked to provide proof that you are actually paying rent to your mom (including rental receipts, bank transfer transaction proof etc).

      Anyways, yes you can claim HRA as long as you are showing the income from the house that is rented out as part of your income tax returns.

      Delete
  19. Hi Anand
    I am staying at Thane and my family at Gurgaon. I am paying rent for both locations. Can I claim the HRA rebate for rent paid at Gurgaon. Both the lease agreements are in my name
    .
    Thanks
    Alok Chawla

    ReplyDelete
    Replies
    1. Does either of your parents have a pension or any other source of income? If so, then you can only claim rent for the house you stay in Thane. If both your parents have No Income and are entirely dependent on you, then I think you can claim both

      Delete
  20. Dear Sir,
    Me & my wife both are working in IT sector at Pune and both are in 20 % bracket. We plan to buy two ready flats at Pune costing around 50 and 30 lakhs. These will be our first properties and will be financed by loan. These are located in adjacent areas. We will be occupying one of the flats. Please guide as to
    • How we shall take the loan/own the properties, jointly or separately for both properties to minimize the tax liability.
    • Will the principal and interest deduction available for both of us
    • How will be tax treatment in case of unoccupied flat
    • What will be the tax treatment if we live in our ancestral house at Bhosri, near Pune and rent out both properties


    bkumar.2000@rediffmail.com

    ReplyDelete
    Replies
    1. Hi,
      Most tax benefits are only available on self occupied property. Two people cannot claim full tax benefits on the same house (They can only share)

      Answers to your Q's

      1. You can try any option. In all options, only one house will give you full benefits. The second or third wont give u that many benefits
      2. For self occupied property - both. For the others - only interest and that too will be allowed only if you are adding the rent from that property to your tax returns
      3. A notional rent of that house wil get added to ur annual income for taxation purposes (If you want tax benefits)
      4. you need to add the rent from both houses to ur tax returns and can avail tax benefit on the interest component of the home loan. Plus, since its ur ancestral property whre u r living, you wont be able to claim any other benefit like House Rent.

      You should read my book on indian income tax and retiring as a crorepati. That can give you a lot of ideas on saving tax. Check it out here: http://anandvijayakumar.blogspot.sg/p/books-by-this-blog-author.html

      Delete
  21. Hi Anand,

    Needed your expert advice on a small thing.

    Me and my father have a jointly registered home in our home town.We have cleared all loan for it now.

    Now i have bought another house in the city where i work. So is it possible for me to show the house in my home town as self-occupied and claim the principal and entire interest benefits for the new house considering it to be notionally let out and add notional rent for the new house to my income?

    ReplyDelete
    Replies
    1. No, you cannot claim notional income as rental on a self occupied property. You can claim both principal and interest exemption for your current (Self occupied) house - thats all.

      Delete
  22. Hi, I work in pune and have a rented apartment out here, my wife and kid and parents stay in a rented apartment in mumbai.
    4 days i am in pune and for 3 days i stay in mumbai. However i have to pay rent for both the flats - can i claim HRA deduction for both the flats in pune and in mumbai?

    Pls advice.

    ReplyDelete
    Replies
    1. Yes, I think you can. Consult a good chartered accountant or tax consultant. They can help you with this.

      note: The amount of HRA you can claim is capped at the HRA Component of your salary. So, if the rent of the 2 houses is more than your HRA eligibility, your tax benefit is capped at HRA limit

      Delete
  23. Hi, I bought 2BHK apartment in Pune and currently its self occupied, Due to high EMI I want to sublet one of room. In this case, how much exemption I can claim under Section 24
    - Self occupied : 2 Lacs
    - Let out : Full loan interest (~5 lacs)

    In other words, can I claim full House Loan Interest under Section 24 exception, even though I am living in same property and sublet part of apartment?
    I am fine with paying income tax on rent I will receive.

    -Aditya


    ReplyDelete
    Replies
    1. Subletting is a slightly tricker subject and hence it is advisable if you consult a good tax consultant or chartered accountant. Yes, you will have to show the rent you receive as income but I dont think you will be allowed to write off the entire interest because the house is presently self occupied.

      Delete
  24. I am a house owner and I have recently rented out my apartment. My question is : Does the Rental agreement need to be on Rs.20 stamp paper or Can I just print it out on A4 paper and put signatures on Re.1 revenue stamp ? Please assist.

    ReplyDelete
    Replies
    1. Preferably on the stamp paper and then register the same. A simple A4 agreement usually isnt binding in a court of law.

      Delete
  25. Hi,

    I live with my husband in a rented house in Mumbai. The house rent agreement was signed with my husband. I submitted the proof in my company to claim exemption against HRA. The company refused to accept it since it is not in my name. Is this right?
    1.My husband does not claim for exemption in his company
    2.I pay the rent anyway.
    What stops me from claiming for exemption and how can I fight with my company to get my money back that they have deducted under tax.

    ReplyDelete
    Replies
    1. You can only claim HRA if the rental agreement is solely or jointly in your name. You have to talk to your landlord and get the rental agreement rewritten to include your name as the sole or joint tenant of the house. Then you can claim HRA.

      The company is not expected to allow you to claim HRA that is in your husbands name even if he is NOT claiming tax relief on the same.

      Delete
  26. Dear Anand

    I am staying in the rented apartment along with my friend. My company is asking to submit the registered rent agreement to claim the HRA. Will notorized rent agreement with PAN number and rent receipt from owner won't suffice? Is it mandatory to submit registered agreement?

    Please advise.
    Regards
    SS

    ReplyDelete
    Replies
    1. Usually a notorized and signed rental agreement that mentions the PAN number of both the tenant and the owner should suffice. However, registering the rental agreement is always a good idea.

      Delete
  27. Hi, sir......
    I have own shops and gave rent to one person his not paying rent and not laeving the shop what can i do...

    ReplyDelete
  28. hi Anand,
    I stay with my parents but I claim HRA as it is less 8,333. But what should I do if It exceeds 9000? Please advice.

    ReplyDelete
    Replies
    1. you should not claim HRA while you are staying with your Parents. It is called Tax Evasion and is punishable by law. There are many other legal ways to save tax. Check out my book on Indian Income tax to learn them. Doing this HRA Claim can land you in a lot of trouble if caught.

      http://anandvijayakumar.blogspot.sg/p/books-by-this-blog-author.html

      Delete
  29. What if I am given HRA more than 10,000 per month and I do not pay rent. What to do about it? Please advice.

    ReplyDelete
    Replies
    1. If you dont pay rent, your HRA will be fully taxable

      Delete
  30. Hi Anand,

    I'm very impressed by your blog, its very informative .

    I have a query and have put it in point based for simplicity

    1) Me and my father constructed a house in Bangalore.

    2) We took Joint-Loan for the same .

    3) My father is the sole owner of the house , but i pay the loan EMI

    4) When I tried to claim the tax exemption , I was told I cannot claim as the owner of the house is my father.

    5) Since it was the last day for filing , I went ahead without the claim thinking I will claim using ITR .

    6) What Documents I need now to get my returns .


    Thanks in advance , I'm not getting proper reply from any of the links or Blogs

    ReplyDelete
    Replies
    1. Hi, I dont think you can claim tax exemption on a house owned by your Dad. As far as I know, you need to be either a sole or part owner of the house or the house must be registered in your wife's name to claim tax benefits.

      The one option you have is to add yourself as a joint owner of the house and then you can claim tax benefits next year

      Delete
    2. Cant I can show the proof when i file my returns and claim the benifits ?

      Delete
    3. What proof? you mean ownership of the house? If you have the proof that you own the house then you can claim the benefits any time you want

      Delete
  31. Hello sir,

    It is a good blog. Can you please clarify the following:-

    If we have two houses and both are rented out, is it possible to show rent from one house as husband's income and from other as wife's income. The houses are registered jointly(on both husband's and wife's name). There is no housing loan against one house where as other house has a housing loan against which interest exemption is being claimed.
    Regards. Mohit

    ReplyDelete
    Replies
    1. Is your wife employed? If so, I think it should be ok as long as the rent from both homes are counted. If your wife is a house wife, then you have to add both the rental incomes to your tax returns.

      Delete
  32. Sir,

    Then the registration of the house on joint names has no advantage. From the earlier blogs I thought if the house is registered on joint names and no income tax deductions are claimed (ie interest etc), then the rent can be taken by the person on whose name the agreement is registered. Regards. Mohit

    ReplyDelete
    Replies
    1. No, Mohit that is not true. How can someone who doesnt own the house be the one receiving the rent as part of an agreement?

      Can I be the one signing a rental agreement for your house and take the rent? Even if you and me are best friends or relatives, this is not applicable. The one signing the rental agreement should be either the sole or part owner of the house.

      The only exception is when the owner gives a power of attorney to someone else and they sign the agreement.

      Delete
  33. Hello Sir,

    Wonderful blog!!!. I have one query regarding HRA claim. I am working woman and recently constructed a house on a land purchased by my Father in law. We made the joint registry of land on his and my name, as I had to avail the Housing loan on it for the construction of house. I am currently availing the benefit of Housing interest limit from my salary but wanted to know whether I can also pay House rent to my Father in law, as he is joint owner of the land.
    Please share your thoughts on the same.

    ReplyDelete
    Replies
    1. No, you cannot. How can you pay rent to a property that you already own partially and are claiming housing loan interest benefits? Its not possible.

      Delete
    2. There are many other options to reduce your tax. You can find them in my book on indian income tax saving. Check out this page for details on how you can purchase the book: http://anandvijayakumar.blogspot.sg/p/books-by-this-blog-author.html

      Delete
  34. Sir,
    I am having a joint house property with my wife & she is working. Full rent of the house is being deposited in wife's account. Whether full rent income can be consider for tax payment by my wife as it is being actually being deposited in her account or divide the income & i need to pay tax on this 50% income even this income in not deposited in any of my bank account.

    ReplyDelete
    Replies
    1. As long as one of the joint owners is paying tax on the full rental income, it should be ok. However, if she is a house wife then you have to add that income to your tax returns.

      So, if your wife has other income, yes your wife can show the full income in her tax returns and pay tax on the same

      Delete
  35. Sir, I have 2 houses. I live in the one in Pune against which I also pay housing loan interest as well of approx 1.9 L per annum. The typical rental value of this house is about 18K per month. The second house property in Delhi is leased out and fetches a rent of 30K per month. Is it fine to declare the Delhi property as self occupied with nil income and show the Pune one with notional rental income. ?

    ReplyDelete
    Replies
    1. Hi Sunil.
      No, it is not ok. As you live in Pune, you cannot show a house in a different city as the one you live in, especially when it is rented/leased.

      Delete
  36. Hello,
    I am salaried individual. I have a flat in name of myself and my mother of which recently i got the possession. I am paying the emi on home loan from past 4 years ( during under construction). My queries are:-
    1. Can I claim rebate on home loan emi in income tax and also pay some rent to my mother and claim HRA. Since nearly 50 % of payment is done from her account she is also owner in terms of contribution.
    2. is there any clause that says home loan rebate is not applicable if flat is not given handed over with in 3 years of taking loan.

    Regards,
    Ashutosh Jain

    ReplyDelete
    Replies
    1. Ashutosh,
      Firstly - When a house is under construction you can only claim rebate on the interest repaid and not the entire EMI Amount. Secondly - you cannot claim both home loan EMI and rental income for the same house. How would you pay rent for a house you already own?

      I am not aware of this 3 year clause but please check with your bank

      Delete
  37. Sir I am living with my husband in rented house. I want to know that rent agreement only made with the name of husband name or jointly we can made the agreement.

    ReplyDelete
    Replies
    1. The agreement can be in the name of as many names as you want. You could get an agreement with both your names or even add an extra name added to the agreement

      Delete
  38. Myself and my husband co-owner of a flat and co-applicant of bank home loan.

    My widow sister (no children) has already a flat and now purchased another flat without any bank loan and wish to make me co-owner of this flat. Can I become co-owner with her?

    Please advise me in the matter of my tax exemption and my co-ownership in another flat. Your guidance in other matters related to my co-ownership.

    ReplyDelete
    Replies
    1. Sure, she can make you the co-owner.

      With regards to taxes, as co-owner you are liable to pay taxes on the income earned from the house. As long as one of you pays the taxes on the income coming out of the house, there are no issues. If she fails to pay income tax or property tax on the house, you will be liable to pay them.

      Delete
  39. Hi,

    From Kerala,I own a second property jointly with my wife.It is vacant.I do not receive any tax benefits from this property.Should I pay notional rent tax.?

    ReplyDelete
    Replies
    1. No, if you are not availing any tax benefits from the 2nd house, I dont think you need to pay tax on notional rent

      Delete
  40. Hi,

    Rent agreement is on my name, however as I'm abroad I'm not getting the Salary in India hence will not be claiming exemption in India.
    My wife is still in India and staying in the rented flat.
    How can my wife claim the HRA exemption with her employer as the agreement on my name.

    ReplyDelete
    Replies
    1. For spouses - it should be ok as long as a rent is being paid for the house.

      If her employer does not agree for the HRA Exemption, ask for the housing rental agreement to be rewritten with your spouse as a joint tenant.

      Delete
  41. Hi Sir,
    1)I am a retired central government employee,
    I am planning to buy a new flat worth Rs.30 Lakh from the Money I received after retirement. Should I have to pay any income tax for this?

    2) I will also be selling my present residential Flat within 6-7 months after taking the possession of the new flat. What tax law applies for this?

    As a retired person except pension I don't have any other income. Will there be any benefit for us?

    ReplyDelete
    Replies
    1. What money you received after Retirement? If it is EPF or EPS then the amount is non taxable. If you got something like leave encashment or salary arrears etc then the amount will be taxable

      Any property sold in such a short duration is liable for short-term capital gains tax. The profit you make would be taxable.

      Delete
  42. Hi...I am staying in a rented house. I am getting the HRA as part of Salary. I also Pay rent from my income. But Rent agreement is in the name of my Father. But Rent is paid by me. Can I get the exemption for HRA ???

    ReplyDelete
    Replies
    1. No, you cannot. Ask the house owner to revise the rental agreement to include your name as the primary tenant. Once that is done, you can claim HRA

      Delete
  43. Dear Sir,
    I have purchased a house and it is under construction. I will be getting the possession in this FY. My interest outgo is much more than the rental income expected out of it. Under the circumstances, is it okay to show it as rented out to my parents so that i can claim the income tax deduction on the interest part? I am willing to show and include rental income as a part of my total income.

    ReplyDelete
    Replies
    1. Showing a house as falsely rented is illegal and you may end up with a lot of problems. Just rent out the house once it is delivered to you and then include the rent as income to offset the interest.

      Delete
  44. Sir,
    I live in a apartment which is registered to me and my mother.

    Can i pay rent to my mother to save taxes?
    My mom is a senior citizen. She has a pancard but never filed IT return.

    ReplyDelete
    Replies
    1. How is it possible that you pay rent for a house that you already own jointly with your mom?

      Even if your mom was the single owner for the house, paying rent to parents can be a big problem if the tax officials inquire even if your mom actually files tax returns showing the rent you pay as part of her annual income. If she does not file tax returns, it will be a bigger problem.

      Delete
  45. Hello Sir,

    Me and my friend live as pg agreement both have name as -
    1)My friend
    2)Me

    can i show separate rent receipt of 3750 as totl rent is 7500 per month.
    plese help..

    ReplyDelete
    Replies
    1. Actually you can use the same receipt - as long as together you and your friend claim only 3750 individually (total 7500).

      Since it have both your name and your friend name, both can equally split the rent amount and claim HRA

      Delete
    2. Actually we both take saprate receipt from starting my HR said that only the person who's name is first can claim is there any rule like that. Can person who's name is 2 nd can't claim??

      And what can I say to my HR is leas copy submission is compulsory???

      Delete
    3. As far as I know, as long as both parties are not claiming the full amount, you both can claim 50% of the rent since both your names are on the receipt.

      Yes, a lease agreement or rental agreement is compulsory these days owing to the high number of fake HRA Claims that are happening.

      Delete
  46. if my agreement is as paying guest is it compulsory to submit Agreement copy to HR.
    and can paying guest sharing guys claim for HRA.

    ReplyDelete
    Replies
    1. As far as I know, the answer is Yes to both your Questions.

      Delete
  47. Hello Sir,
    I am salaried, My son purchase a house, I live in that can I claim HRA rebate?
    Thanks
    Regards

    ReplyDelete
    Replies
    1. Are you really paying rent to your Son to live in his house?

      Delete
  48. Sir I am a pensioner drawing 17000/- per month. I intend renting out my flat owned by me for Rs 15000/- per month Can the lease agreement paper be drawn in favour of my mother who is a senior citizen and lives separately? Do i still have to pay income tax on the house rent received? My mother has no other source of income.

    ReplyDelete
    Replies
    1. Sorry, Only the owner of the house can sign a lease. If you want someone else to sign the lease, you need to give them a power of attorney and even in that case, you only will be expected to pay taxes because they are acting on your behalf.

      I would recommend you consider my book on Indian Income tax to legally reduce your tax liability by utilizing all the options available

      Delete
  49. Hi anand,
    my query is i have stayed in mumbai from april 2015 to aug 2015 and till december 2015 i am staying in bangalore.i had stayed in two rented house. so while submitting the rent recepts for hra calculation, should i submit for both the rented houses??

    ReplyDelete
    Replies
    1. Usually the house that was rented in the city where you worked is the one taken for HRA. So, between the overlapping period where 2 houses were rented, whichever city you lived in, thats the house you can claim HRA

      Delete
  50. actually i got transferred from mumbai to bangalore..in that case what should i do??

    ReplyDelete
    Replies
    1. For the period you worked in mumbai claim HRA for that house and for the period you worked in bangalore, claim HRA for the house in bangalore

      Delete
  51. Hello Sir,
    I pay rent of 5000 to my landlords son.
    From past 2 years Lanlord stays at her native.
    Agreement is also not duly signed, we make agreement but it is just kept by her son.
    Could you please advise what steps should I take to avail tax exemption.
    Should I make all formats of past and future agreement and receipt and have her sign it if she visit once.or can her son sign? If yes then how.
    Thank you.

    ReplyDelete
    Replies
    1. Hi - Only the landlord/owner of the property can sign the rental receipt or agreements. If the landlord is giving a power of attorney to their son then the son can sign on their behalf.

      You need a proper rental agreement with the PAN Card info of the landlord to avail the rental exemption

      Delete
  52. Hi anand,

    i have rented a house in for 16500 PM, and owner ready to get money transfer to his bank account and but not ready to share his pan no., how can i claim the HRA in this case, any if i need mandatorily PAN card can i get that info from his bank where he have the account.
    what are consequence incase we show PAN card no. of somebody else.

    ReplyDelete
    Replies
    1. Yes, PAN is mandatory if you want HRA benefit. If you transfer to his account, eventually he has to show the income in his tax returns because the bank will pass on the info to the tax officials. So, he might as well give you his PAN info so you can avail the benefit too.

      If you show PAN of someone else, that person will be expected to pay the income tax on the rental income which is received by someone else. Hence, this is illegal

      Delete
  53. Hi Anand! Happy New Year:)

    I'm from Mumbai & I pay 18k rent per month to my parents and I have to give my rental agreement + rent receipts to my company (I have just resigned)
    I have two questions -

    1) Is it okay if the rental agreement is on a regular 100 Rs. stamp paper without my name?
    2) My transactions show 20k per month (18 for rent & 2 for the maid) will that be a problem or should the rent agreement say 20k?

    Cheers!

    ReplyDelete
    Replies
    1. First of all, paying rent to parents is not something that is recommended because they are your parents and you dont really pay rent to them. Anyways if you insist on going that route you need to make sure your parents include this rent in their tax returns and pay the requisite tax.

      plus, whatever amount is entered in the agreement will be the HRA Claim. you cannot include Maid salary and other expenses in the Rent.

      Without your name? how would anyone know you are the tenant? The agreement must have your name, your parents name, both your PAN Card and the amount of rent paid/received per month for the agreement to be valid for tax purposes

      Delete
  54. Hi Anand,

    my owner is not ready to share his pan, but ready to sign "no pan declaration", planning to shift next month, and planning to stay for longer duration at this place, do you see any chances that no pan declaration might be void, or get change in near future.

    ReplyDelete
    Replies
    1. Hi - this is more of a short-term workaround rather than a permanent solution. In future government may change the rule that no PAN, no HRA benefit and you will struggle. Try to negotiate with the landlord to get the PAN Info for your benefit

      Delete
    2. i am planning to stay there only upto dec 2017. should i expect this rule to work atleast till that time.

      Delete
    3. I cannot comment on governmental policies. They can change any time. As I said before, without the PAN of the landlord, the HRA Claim can be rejected at any time even if you have this "no pan declaration" because in this case the landlord has a PAN but isnt sharing that. So, technically the no pan is actually a fake claim which can result in problems for both you and the landlord in future

      Delete
  55. Sir... I am planning to rent a flat in chennai. The landlord wishes to receive the rent amount and deposit amount in his mothers account and he can give the PAN no of his mother as well. in this case should the rent agreement be with the owner or his mother. secondly, can the rent agreement be with the owner and all financial transactions with PAN number be of his mother?

    ReplyDelete
    Replies
    1. Hi Anup - the rental agreement must be made with the person on whose name the property is registered. Who is the legal owner of the house? the landlord or his mom? If its the landlord, then his info should be in the rental agreement along with his PAN number. If its the mother that is the owner, then there is no problem - everything can be in her name.

      Delete
  56. Hi Anand, My question is : Suppose i mention my Land Owner's PAN no for my HRA Exemption, what is the probability of passing that PAN no to income tax Dept by my Employeer ? Does employer send every PAN No to income tax buddy or Employer just taking it for any audit purpose ? and when income tax dept send the notice to my owner, if he does not include the rental income while filling ITR.

    ReplyDelete
    Replies
    1. Yes, your employer will definitely furnish that info to the IT Department and there is a good chance your employer will be caught if he doesnt show the rental income in his ITR

      Delete
  57. how much maximum rent as cash from a tenant in Delhi can be collected, as their cheques are dishonored frequently and they waste time preparing P.o.,NEFT etc. at present the rent is around Rs. 27,000. regards Anil Seth

    ReplyDelete
    Replies
    1. Do you have a rental agreement or anything to quantify the amount you are going to receive for tax purposes? As long as you are including the rent received as "Cash" or "Cheque" or whatever mode, I dont think the mode of payment matters.

      Delete
  58. Hi Anand,

    I am planning to buy a house on a joint name with my parents (33.3% share each). I am going to move into the new house with my parents. Can I pay rent to my parents for the 66.6% share they own in the property and claim the HRA benefits? Also, can I also claim the interest and Principal benefits on my share of the house when i go for a home loan?

    ReplyDelete
    Replies
    1. No, its not possible. How can you be an owner of a house and claim tax benefits on home loan and pay house rent for the same house?

      Delete
    2. Just wanted to clarify as I am not complete owner of the house and I have only 1/3rd share in the house. I will be taking interest/principal benefits only on 1/3rd share of the loan. What would be the most tax efficient structure in this case? Should my parents buy the house in this case?

      Delete
    3. Even if your parents own the house fully, you still cannot pay rent to them because they are your parents. Anyways, yes 1/3 principal/interest benefits is as much you can claim.

      There are other tax reduction options you can consider. check out my book on tax savings. see here: http://anandvijayakumar.blogspot.sg/p/books-by-this-blog-author.html

      Delete
  59. Hi Anand, I am Shalabh and am a salaried individual.Your knowledge is really impressive. I need guidance on below points.
    1. I own a joint property with my wife(working) and my father(retired).The rent agreement is in my name and rent being received in my bank account. Home loan has been taken jointly by me and my wife and EMI is being paid from my wife account. As I am receiving rent, can I claim tax benefit although loan EMI is going from my wife's account.
    2. The possession of the said flat was received in Sept,2015 and it is put on rent from Jan,2016. Should rental income of only 3 months to be taken into consideration for this FY or notional rent since Sept has to be taken for computing 'Income from House Property'.

    ReplyDelete
    Replies
    1. As long as only one person is claiming the tax benefit & showing the house rent in their tax returns, for joint properties it should be ok.

      yes, you have to consider notional rent for months the house was unoccupied if you want the higher tax deduction on interest.

      Delete
  60. Hi Anand. I have mentioned my Owner's PAN no without his letting know to my employer. Since my owner receives rent in cash. what could happen in such case if he did not include rental income in ITR ?

    ReplyDelete
    Replies
    1. If the Tax officials find out that your owner isnt showing that rental income in his tax returns, they will file a case of tax evasion and maybe even arrest him

      Delete
  61. Hi Anand! 2 months back i vacated my rental house and shifted to another place due to nuisance caused to my family with neighbours.at that time i have to pay a balance rent of 1600 to my owner. His brother followed us for that balance and we postponed.yesterday owner.s brother put electricity bill of that flat in Facebook timeline of My wife and insulted her. and also thereat us if we are unable to pay that amount they will file cheating case against us and put that FIR copy again in Internet. Shall we have any chances to face him legally and file personal damage suit against my house owner.s brother for commenting and insulting my wife thru Internet? is he can file cheating case against us?

    ReplyDelete
    Replies
    1. If you owe them rental money then of course they can file a case of cheating against you. However, even if you owe them money, intimidating through facebook or insulting your wife is not correct. Please contact the police

      Delete
  62. Hi Anand,
    Read your blog it's very informative. I need to ask few questions.
    1. If someone declares his rental income does he need to pay property tax.
    2. I have applied for a home loan where i told i have rental income to increase my eligibility, the bank as asked for a rent agreement, which i don't have as the tenant is a family friend and trustable person. What can i do here?
    3. do you need a stamp paper for agreement or you can just make it on simple paper, followed by notary stamp.

    ReplyDelete
    Replies
    1. 1. Property being on rent has no bearing on property tax. You own property, you pay property tax thats all
      2. You need to sign a proper rental agreement for the rent that you are receiving and have it signed by this family friend. Once signed, the agreement needs to be submitted to the bank. This agreement must specify both your PAN card number as well as your friends.
      3. It has to be on stamp paper. Simple paper is not allowed

      Note - If your property is rented out and you are receiving a rent, irrespective of whether you have a rental agreement or not, you need to pay taxes for the same.

      Delete
  63. Hello Sir,

    I have rented my own house and moved to a rented apartment.

    I pay a rent of 40,000 and receive a rent of 25,000/-.

    Can i make this rental agreement in my Wife's or Mothers name for 25,000 and show it as their income. They are both house wife's with no income on their side as of now. Under this situation can i claim HRA for the rent i pay and also claim for the Interest paid on my housing loan. '

    The house is individually owned by me and i pay housing loan interest of 2,00,000 a year.

    If you could kindly suggest, i am looking forward for your valuable inputs.

    ReplyDelete
    Replies
    1. Firstly - If you want to claim tax benefits on the interest paid on a home loan, you have to either live in that house or show the rental income on the house on your tax returns.

      Secondly - Even if you put the rental agreement on your wife or mom, being the head of the family and with both having no income, you will be automatically expected to pay taxes on their income. However, if you are the sole owner of the house, showing them as the owner for rental agreement purposes may be considered forgery.

      So, I would suggest you show the rent you receive as income, claim tax benefit on the interest you are repaying on the home loan and then show your rent for HRA

      Delete
  64. Hi Anand,

    I am an NRI since 2008 (I left India in 2008). I never paid any Income tax and never filed an ITR. I am layman in this field. Currently, I own 2 flats in mumbai and both are rented with 25300+8000 per month income from them.
    My tenants do not deduct the TDS for both.
    Now I would like to start filing the ITR (at least the zero).
    I have two major queries:
    1. How to start filing the ITR (procedure to start filing the ITR for the first time atleast)?
    2. Which major documents are required for the same?

    ReplyDelete
    Replies
    1. Firstly, You would need a Rental AGreement that shows how much rent they are paying for the houses. The agreement must specify their PAN number as well as yours.

      Secondly, you need to club up any other income in India (maybe trading or bank interest etc)

      Then contact a good tax filing service or chartered accountant for the same. Since you wont be in India at the time of filing the tax, it would be easier to go through such a service

      Delete
  65. Hi Anand
    Happy to see that you are actively answering all questions posted here. My land lord not providing rental receipt or his pan number for past 2 years. I vacated his house 2 months back. When ever I am asking for rental receipt they just blame me for something and not providing receipts. I have all proofs (rental transfer, EB payment).. How to claim HRA in this case?

    ReplyDelete
    Replies
    1. Do you have a Rental agreement or something else to prove you were a Tenant? Fund transfer transaction on your bank statement or EB Bill is not proof enough that you can claim HRA.

      If you have a Rental Agreement, just use that and claim HRA

      Delete
    2. Yes I have rental agreement... Thanks for your valuable information...

      Delete
  66. i am working in a bank and getting lease rent from my employer of rs 11000/- p.m. but i am paying a total rent of rs 16000/- p.m. ( 5000/- from my side) ,pls guide can i get tax exemption under sec 80gg and what will be the total amount.

    ReplyDelete
    Replies
    1. Section 80GG is only for people who dont have HRA as a component in their income. Since you are already getting some allowance from your employer, I dont think you are eligible.

      Refer to my book on indian income tax here: http://anandvijayakumar.blogspot.sg/p/books-by-this-blog-author.html

      Delete
  67. sir
    my name is nirbhay gupta
    i am staying in burhanpur in bank quarters and my family is staying in Indore via rent house@12000/-.
    my father is not working and i am paying the rent month so can i get the tax exemption for that.

    ReplyDelete
    Replies
    1. Yes, if your parents are dependent on you, you can claim HRA for the rented house they live in.

      Delete
    2. Hi Mr.Anand ,

      I am sole owner of the property , can my wife take rent of my behalf as I am not keep on claiming tax amount . Rental value is Rs. 17000 / month . My wife is house wife

      Delete
    3. No. If you are the sole owner how can your wife claim rent on her income tax?

      Delete
  68. Hello Sir,
    Had a different kind of query. My only source of income is from running a Paying Guest House,Its a building which I have taken on rent and I pay 3 lakh rupees monthly, my income from this is 50000 rupees per month, now the queries I have are:
    1) Under what category I should pay my income tax?
    2) How to calculate my income tax?
    3) I live in one room with my family, can I deduct HRA while paying income tax, if yes, how much?
    4) My business is not a registered one, should that be an obstacle while declaring?

    ReplyDelete
    Replies
    1. Answers:

      1. Income from other sources - Rental & Other income goes here
      2. Yours will be considered a business and hence the money you invest to keep it running will be deductible but, its not straight forward as X-Y amount.
      3. No, I dont think so
      4. Yes, you need to register your business before you start paying taxes or claiming expenditure.

      Consult a good chartered accountant, they can help you with the whole thing

      Delete
  69. Hi Anand, I have been paying rent for last three months. My monthly income is 55k and the company cuts tds of 3k/month from my salary. I pay 19k/month as rent. Also my salary slip doesn't mentions hra in it. Am I eligible for tax benefits for renting a house? If yes what would be my taxable income.

    ReplyDelete
    Replies
    1. I have published a book on Indian Income tax and the details of the possible tax saving avenues are available in the book. You can check it out here: http://anandvijayakumar.blogspot.sg/p/books-by-this-blog-author.html

      Calculating your taxable income is quite complex and without knowing more about your salary structure and expenditures, its not possible for me to give you a correct response. In my book I have given an example of how to calculate tax liability and you can use the same to calculate your taxable income.

      Note: If you do not have HRA in your salary, you can still avail tax exemption on the rent but it wont be for 19k. You can find details of the same in my book.

      Delete
  70. Hi Anand,
    I am staying with my family in rented house and the rent agreement is in my fathers name but i am paying the rent to the landlord.My queries are:
    Can I claim HRA if yes then
    1.Should the rent receipt be in my name
    2.Should i pay by cash or account transfer to show that i am paying rent

    ReplyDelete
    Replies
    1. 1. Yes, Rent receipt has to be in your name plus it is recommended to change the rental agreement to be in your name as well
      2. Preferred mode is account transfer for future reference/proof from your side

      Delete
  71. Hi Anand, If I rent out a floor of my residential leasehold building to my wife at say Rs. 2000/- pm who in turn sublets the same at higher rent say Rs.4000/- pm. What will be Income Tax implication of mine and my wife? pl.

    ReplyDelete
    Replies
    1. First of all, you cannot sublet or sublease a house that you have leased to your own wife. So, if you want to directly sublet that 3rd person for 4k, you will have to pay tax on the 4k income.

      Delete
  72. Hi anand,
    I am an nri and new to taxes in India. I have a flat that gives 14k a month rent. Apart from property tax and income tax is there a TDS tax at 30.3% that I need to pay?

    ReplyDelete
    Replies
    1. TDS stands for Tax deducted at source. It means - your tenant will deduct 30% of your rent as TDS and will give to government/IT Department.

      You will make file your tax returns at the end of the year and claim a refund in case the amount paid as TDS is more than your tax liability.

      I would recommend you read my book on Indian income tax. see here: http://anandvijayakumar.blogspot.sg/p/books-by-this-blog-author.html

      Delete
  73. Hi Anand,

    My sister stays in US and she has her flat in Pune and she wants me to rent her apartment out. I have power of attorney for the flat. The rent will be transferred monthly to her Indian bank account and she will mention this money as source of other income in US as well.

    My queries -
    1. Will the agreement be between my sister and the tenant, And I will just act as facilitator. Or will it be between me and the tenant?
    2. Do I need to provide my PAN card for the agreement or should it be my sister's?
    3. Do I need to put any special clause in the agreement so that I am not legally bound to show that income in my earning as I am not receiving the rent?

    ReplyDelete
    Replies
    1. 1. Yes, agreement must be between your sister and the tenant. You will just sign on behalf of your sister as you have the POA
      2. No. it must be your sisters PAN
      3. No, not required. As long as the money goes into your sisters acc and she pays tax on the same, you dont need to do anything.

      Delete
  74. Hi Anand,
    We are 5 bachelors who have rented a flat paying 1 lakh deposit and 22k rent per month. All our names are present in the rental agreement that we 5 of us pay him 22k each month(Individual shares not mentioned in agreement). To pay the rent, 4 of us transfer our money to the 5th guy's account and then he further pays the rent to the flat owner.
    Will this money transferred to the 5th person from 4 of us act as 5th guy's income and should he be paying income tax for the money he recieves in his account?


    ReplyDelete
    Replies
    1. As long as the 5th guy is paying the money given by the 4 guys to the land lord, NO that wont be constituted as income.

      Delete
    2. Hello Sir,

      I have made a rental agreement with my landlord as on 09.05.2015. There was a clause as shown below

      *The rental agreement is for a period of 11 months, commencing from 09.05.2015. After 11 months, the rent will be increase by 5%

      Does it mean that I can submit the same rental agreement for HRA exemption for the year 2016 as I am staying in the same house ? or Do I need to make a new rental agreement for year 2016 ?

      Delete
    3. The 5% clause would need to be translated into a rupee value and a new agreement has to be signed next year with decision on the % increase for the subsequent year. Just the % clause may not be enough for next years HRA claim

      Delete
  75. Hi Anand, I am an NRI and my spouse and kid are resident in India. My wife and myself jointly own two properties in India, one is self occupied and other one is rented. The rent is received in my wife's resident account, can we both claim 50 percent rent received in our returns or my wife has to declare 100 percent rent receip while filing returns? Plz advise.

    ReplyDelete
    Replies
    1. If the rent receipt states her name and money is deposited into her account, she would have to declare 100% of the income in her tax returns

      Delete
  76. Hi! My husband owns a property which is rented out. The rental agreement is in his name and the rent goes to his account. However it is my PAN given to the tenants who duly pay rent after deducting TDS. I need to file returns. But my auditor says I can't file returns for income on an asset which is not in my name. Kindly advice what we need to do next.

    ReplyDelete
    Replies
    1. add your husbands PAN to the rental agreement and ask him to file tax returns on the same

      Delete
  77. Hi Anand, Property is in my name and still home loan is pending, i am planning to move rental house. Any possibilities i can give Power of attorney to my wife to manage the house (rental...) and she can collect the rent and file the income tax returns.



    ReplyDelete
    Replies
    1. No, power of attorney will allow her to collect the rent but the tax liability will still fall on you because power of attorney does not mean property rights are transferred plus the house is in your name.

      If the house was jointly owned, then she can sign a rental agreement with tenants using her name and PAN info and pay tax on the income

      Delete
  78. Hi! rent agreement for my home is in the name of my father in law and I pay the rent for the house. do I have to get a new rent agreement made in my name for showing rent during tax declaration or can I do it some other way? I was avoiding a new rent agreement route as I have to pay again for getting the rent agreement made.

    ReplyDelete
    Replies
    1. In case of parents who are fully financially dependent on an individual, the rent paid can be taken into account for HRA but it is advisable you get the agreement changed to be in your name to avoid confusions in future. The amount you pay for the agreement will probably be much lower in comparison to the tax you will save for the year.

      Delete
  79. Hi Sir,
    Our house is in name of my Mother. So Can me and my dad show hra for the same house. Also can we both show the same PAN number of my mother if our rent exceeds 1 Lakh annually?

    ReplyDelete
    Replies
    1. No you cannot since she is your mother and how will you show as paying rent to your parents or how can your father show as he is paying rent to his wife?

      Second - Not a valid Q since the first Q about showing your mother as house owner is not applicable

      Delete
  80. Hi Anand ji, i pay rent of 24000 rs and house is jointly owned by 2 brothers. i transfer 12000 to each's account every month. They have provided me the 2 PAN numbers, how can i furnish 2 pan numbers & claim full rent amount. Warm regards Vikas

    ReplyDelete
    Replies
    1. You can get a rental agreement signed by both brothers showing the total amount and the share claimed by each party. This rental agreement can be used to claim HRA

      Delete
  81. Hi Anand, I stay in a rented house , the rental agrement has my wifes and my name in it. My wife is not working and hence not contributing towards the rent. Can I claim the tax exemption for the full rent paid eventhough the agreement has both names ?

    ReplyDelete
  82. Hi Anand, i owned a house at Kochi, and rented it out. Im a salaried person. The tenant is depositing rent to my mothers account. She is a pensioner. So do i need to show this rent as my income?

    ReplyDelete
  83. Hello Anand,

    I stay in a rented place A and claim HRA exemption under my name.
    I have taken my friends place B on rent (agreement is in my wifes name) and sublet my friends property with his knowledge. While paying income tax under my wifes name, I will need to show income received from house B under "Income from Other Sources". Question I have is , can I have show rent I pay to my friend who is land lord under any section ( HRA? ) to save taxes when filing incomes tax for my wife?.

    ReplyDelete
    Replies
    1. The person whose name is on the lease only can claim HRA. Plus if husband and wife live together they cannot claim HRA on two different houses

      Delete
  84. Hi Anand. I have rented out a flat which is co owned by my father. We both want to split rent income. Bur my fathee stays in different city n canr travel.So can I do registered agreement with just my name and mention rent income in ITR of me n my father. Also tenant is ask8ng for PAN.so whose pan number i should give as flat owned by me n my father

    ReplyDelete
    Replies
    1. If the rental agreement doesn't include two names the rent cannot be shared for tax claims purposes by two people. You should put both your names and declare both PAN numbers in the rental agreement and if you do this the rent can be shared between both your tax returns on 50:50 basis. If you want an explicit % sharing and not 50:50 then you can also mention that in the agreement and use the same for tax purposes

      Delete
  85. My mother owns a small plot in bangalore, I am planning to construct a house(G+3 floors) on this plot after getting gift deed executed to my name as this helps me procure a home loan and I am not considering to apply for joint loan. Also my parents will be providing their savings to help me for the construction. My parents will be living on 1 floor and me on 1 floor and plan to rent out the remaining 2 floors. I would like this rental income paid solely to my parents.
    My question is since I have taken a home loan, I would be obliged to declare rental income from property in my tax returns and I fall in 30% tax bracket. Is there a provision that I can promise the rental income of the 2 floors to my mother and she would be declaring in her tax declaration. If possible how do we execute this in a legally accepted document else what options do I have? Please suggest. Thanks in Advance

    ReplyDelete
    Replies
    1. Rental income can only be declared by the owner of the property. if 1 or 2 floors of the house will be rented out, they should be registered in your parents name for them to declare the tax income.

      For home loan, even though you pay the EMI the bank may ask you to make your mom as a co-applicant for technicality because the house is gonna be registered in her name.

      Based on your ownership % only you can avail tax benefits on the EMI you actually pay.

      Delete
  86. hi anand
    i rented house in place1 which is of 10000 rent where my parents,wife live
    2 house rented by me where i live which is 7000 pm. can i claim hra of 10000 as i am only paying rent in both houses.

    both houses are in same city but far.

    ReplyDelete
    Replies
    1. i think you can only claim HRA on the house you live in.

      Delete
  87. Hi anand,
    My grandfather transferred two houses to my name through gift deed. Can I claim HRA that I pay rent to my grandfather?

    ReplyDelete
    Replies
    1. NO, not possible. How can you pay rent to someone else for a house that you already own?

      Delete
    2. I read that if gift deed was done by relative, income from the property will be considered as donor's income and not for the person who accepts the gift.

      Delete
    3. Sorry, I have not heard or read such a ruling. Anyways, even if that was true (just hypothetical) how can someone pay rent for a property that has been gifted to them and that too to the person who gifted it to them? Get the logic problem here?

      There have been cases where people have been caught and penalised for paying rent to parents or spouse and claiming hra even though property was not in their name. You are talking about paying rent and claiming hra on your own property. It's your call..

      Delete

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