Paying Rent to Parents, No Landlord PAN and Other Tricky HRA Cases

The basic HRA rule is simple. Real life isn't: you live with your parents, share a flat, rent a PG bed, own a house elsewhere, or have a landlord who won't share a PAN. Here's what the rules allow in each case, and the proof that keeps the claim safe if it's ever questioned.

Paying rent to your parents

This is allowed and common. If you live in a home your parent owns and genuinely pay them rent, you can claim HRA on it. The tax department looks closely at these claims, so make sure everything lines up:

• The parent must own the house (or co-own it). You can't pay rent to a parent for a home you own.
• Pay by bank transfer every month, into the parent's own account, not a joint account you control.
• Sign a simple rent agreement and keep monthly rent receipts.
• Your parent declares the rent as income from house property in their return. They get a 30% standard deduction on it, so if their other income is low they may owe little or no tax.
• Disclose the relationship. Form 124, which replaces Form 12BB from tax year 2026-27, asks about it directly.

Paying rent to your spouse

Technically nothing in the law names spouses, but in practice these claims are usually rejected. Spouses normally live together as one household, so a tax officer will treat "rent" moving between them as a family arrangement rather than a real tenancy. Unless there's a very unusual, well-documented situation, don't claim HRA for rent paid to your husband or wife.

You own a house as well

• House in another city: no problem. You can claim HRA where you live and rent, and home loan interest on the house you own, as long as you're on the old regime.
• House under construction: you can claim HRA for the home you rent while it's being built.
• House in the same city that you don't live in: the HRA rule doesn't specifically forbid it, but expect questions. Have a genuine reason, such as it being let out, too far from work, or too small for your family. Remember the house you own then has to be shown as let out, with its rent (or deemed rent) as income.
• Living in your own house: you aren't paying rent, so there's no HRA exemption. The whole HRA is taxable.

PG, hostel, co-living and shared flats

Rent for a PG, hostel or co-living bed counts like any other rent. Ask the operator for monthly receipts in your name, and their PAN if your rent is above ₹1 lakh a year (most operators are businesses and have one).

Sharing a flat? Each flatmate claims only the share they actually pay. If the landlord issues one receipt for the whole rent, ask for separate receipts in each tenant's name, or keep the full receipt plus records of your own share.

Your landlord has no PAN, or won't share it

The landlord's PAN is needed only when your annual rent is above ₹1 lakh. If the landlord genuinely doesn't have a PAN, a signed declaration from them saying so, with their name and address, is accepted instead. If they have one but refuse to share it, explain that it's a tax requirement and that it only identifies the income they should already be declaring. Without it, your employer may not allow the exemption above ₹1 lakh.

Rent above ₹50,000 a month: you must deduct TDS

If you're an individual paying more than ₹50,000 a month in rent to a resident landlord, the law makes you deduct 2% TDS from the rent and pay it to the government. This used to be section 194-IB; from April 2026 it's part of section 393 of the new Act. It applies whether or not you claim HRA.

• Deduct 2% of the rent. Under the old rules this was done once, from the rent for the last month of the year or of the tenancy.
• Pay it online with a challan-cum-statement: Form 26QC under the old rules, folded into Form 141 under the new rules. No TAN was needed under the old system.
• Download the TDS certificate from the TRACES portal and give it to your landlord, who claims the credit.

Your landlord lives abroad

Rent paid to a non-resident (NRI) landlord has stricter rules, whatever the amount. You must deduct TDS at 30% plus surcharge and 4% cess, unless the landlord gives you a certificate allowing a lower rate. You'll need a TAN, quarterly TDS returns, and remittance forms if the rent goes abroad. It's worth having a chartered accountant handle this. Missing it can make you liable for the tax you should have deducted, plus interest.

No HRA in your salary?

If you're self-employed, or your salary has no HRA component, the old regime offers a smaller deduction for rent (formerly section 80GG). It's the lowest of:

• ₹5,000 a month (₹60,000 a year);
• 25% of your adjusted total income; and
• rent paid minus 10% of your adjusted total income.

It's not available if you, your spouse or your minor child own a home in the city where you live or work, and you file a short declaration (Form 10BA under the old rules) with your return. Freelancers: see income tax for freelancers.