HRA Exemption for Rent Paid to Spouse- House Rent Allowance Exemption Rules

As you might know, HRA exemption is not included in the new tax regime. If you want to claim tax exemption for rent, you need to opt for the old tax structure. Tax benefits on rent paid to family members can be claimed under the old regime.

Here are the key points that will help you know more about income tax benefits for rent payments:

a. The rent amount paid to the spouse (husband or wife) can be claimed as an exemption under HRA (House rent allowance).

b. Income Tax Appellate Tribunal (ITAT) stated that the rent paid to the legally wed partner will be accepted under HRA and will be exempted.

c. The tribunal has also recommended that the wife and husband work a rent agreement like that of a tenant and landlord and issue rent receipts to the latter.

d. Income tax rules for rent reimbursement state that the wife or husband has to declare rent in their IT filing, even though their income does not exceed the taxable threshold. IT filing is compulsory.

e. For claiming HRA exemption with the spouse, tax exemption, rent receipts, agreements, and form 12BB must be submitted to the employer to claim HRA and tax exemption.

f. There is a rule that the spouse should be the house owner if they accept rent from the latter, and she/he should not even be a part owner.

g. To utilize rent payment to spouse tax benefits, the receipt of the rent must contain the names of the landlord and tenant, PAN details, rental amount, and signatures.

Therefore, the aspects of ownership, rental lease, proof of payments, no circular transactions, and rent received is taxable play a vital role in income tax rules for rent reimbursement.