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Apr 24, 2025
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Tax dept tightens claims scrutiny: Key rules for rent paid to parents
Many salaried individuals claim tax exemption on house rent allowance (HRA) by paying rent to family members, such as parents. While this is legally permissible, the Income Tax Department has intensified scrutiny of such claims.
Increased scrutiny
Tax authorities say they have observed instances where individuals claimed HRA exemption without fulfilling rules to do so.
Common issues include:
Lack of a formal rental agreement.
Rent payments made in cash, or lacking bank transaction proof.
Absence of rent receipts.
Landlords not declaring rental income in their tax returns.
Such discrepancies raise flags, prompting the department to issue notices seeking clarification to many individuals recently.
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