Is House Rent Paid To Grand Mother , Father & Mother Is Acceptable

Dear Seniors,

In my company, there are a few employees who are submitting house rent receipts in the names of their mother, father, and grandmother as investment proof for TDS deduction. Kindly advise if this practice is acceptable given the blood relation.

Awaiting your response.

Thanks,
Ravita

Dear Ravita,

House rent reimbursement is given only in the name of the employee in TDS Calculation.

If any employee borrowed a housing loan, then a repayment schedule is required.

If anybody is the rent payee, then a rent agreement is required.

Particulars Earning Deduction Taxable

Salary 289400 289400

HRA 151250 151250

Conveyance 118350 9600 108750

Children Education Allowance 12000 0 12000

Special Allowance 18000 0 18000

Welfare Allowance 5000 0 5000

Total 594000 9600 584400

Deduction Under Section 80 C

P.P.F./ E.P.F. 2000

L.I.P. 32407

Saving Bond

NSC

Repayment of Principal of Home Loan

Infrastructure Bond

5 Year F.D.

ULIP

Total Deduction 34407

Taxable income from Salary 549993

Income From House Property

Deduction U/s 24 (b)

Interest paid on repayment of Home Loan 0

Taxable Income from house property 0

Income from Other sources

Total Taxable Income 549993

Computation of Income Tax

Up to 160000 160000 0 0

From 160000-500000 340000 10% 34000

From 500000-800000 47593 20% 9519

Above 800000 30%

Income Tax 43519

Education Cess 870

SHE Cess 435

Total Tax Deductible 44824

Ya, it is acceptable. They can show the house rent receipt as investment proof until the employee has their own residence, as per Section 10(13A) read with Rule 2A. At least three will be exempted.

House Rent Allowance (HRA) received:
- 50% of salary in case of residential accommodation taken on rent is situated in Bombay, Calcutta, Delhi, or Madras (Chennai), and 40% of salary in any other case.
- Rent paid in excess of 10% of salary.