House Rent Allowance: If you pay rent to your wife, you get the benefit of HRA exemption. There have been many decisions of the court in this regard, in which the situation has been clarified.
House Rent Allowance: Many types of dilemmas arise in the minds of tax payers. The government keeps making various changes in the tax provisions. You get the benefit of tax exemption on the money paid as house rent (HRA). Now the situation has become clear on one more provision that how you can avail tax exemption by paying rent to your wife. There have been many court decisions in this regard, in which attempts have been made to clarify the situation. Let us understand how it can be taken advantage of.
Tax limit expected to increase in interim budget
In the interim budget 2024, Finance Minister Nirmala Sitharaman is expected to provide some relief to the public by increasing the tax exemption limit. It is believed that the Finance Ministry may increase the income tax limit. HRA (House Rent Allowance) is an important thing for the tax payers. You can claim it regardless of whose name the house is in. Even if the house is in your wife’s name, you can still avail tax exemption by claiming HRA. You can pay rent to your wife.
Benefits cannot be taken in the new tax structure
The thing to note here is that HRA exemption cannot be availed in the new tax regime. If you want to take advantage of this, you will have to choose the old tax regime. Let us understand how to avail the benefits of exemption under HRA. For this you have to keep six provisions in mind.
You will get benefit in this way
- First of all, if you pay rent to your wife, you can avail the benefit under HRA.
- Recently, in the case of Aman Kumar Jain, the Income Tax Appellate Tribunal (ITAT) had said that rent can be paid to the wife. Also, tax exemption can be availed on it.
- For this there should be a rent agreement between husband and wife. Also, the wife will have to give house rent receipts to the husband.
- The wife will have to show the money she receives from rent in her income. Income tax return will also have to be filed. Even if his income does not come under the purview of income tax.
- The ownership of the house should be completely with the wife. The husband cannot even share in its ownership.
- To avail the tax exemption, the taxpayer will have to show the rent agreement and receipts along with Form 12BB.
- These receipts must contain the name of the tenant, name of the landlord, amount of rent, signature of the landlord and PAN card.
