One of the most common questions by taxpayers every year is whether a rent agreement or a rent receipt is required to claim HRA. CA Ruchita Vaghani clarified that a rent agreement is not mandatory for claiming housing rent. However, in order to claim HRA one must provide proof that the rent was paid to the landlord.
In a post on X, Vaghani explained how to claim HRA and what documents are required. According to Vaghani, a rent agreement is not mandatory to claim HRA as the Income Tax Act does not make a rent agreement compulsory for claiming housing rent. However, to claim HRA one must provide documents proving that the rent was actually paid to the landlord.
Rent receipts, online or bank payment records such as IMPS, UPI, NEFT or cheque are necessary to support an HRA claim, the CA said. The landlord’s name and PAN are required if the rent exceeds Rs 1,00,000 per year. If the landlord refuses to share PAN then tenants must file Form 10BA and mention the reason.
The CA said that one can pay rent to landlords who are parents and claim HRA. In this situation, the rent must be paid via bank and the parents should declare the rent as income in their ITR. Fake rent is not permitted.
Vaghani said that if you own the house or are living in your own house then you cannot claim HRA because you are not paying rent. According to the CA, claiming both HRA and home loan interest for the same house is a common red flag that triggers scrutiny. This is only permitted if the owned property is in another city and you are actually living on rent elsewhere.
The CA said that even if your company has approved HRA based on your declared rent, the Income Tax department may still want proof later. As a result, it is always recommended to keep rent receipts and confirmation of bank transfers.
According to Vaghani, one can claim HRA without a rent agreement but they must provide documentation of real rent payment such as rent receipts, bank transfer proof and landlord’s PAN details. The CA has advised people to always pay their rent via UPI or bank transfer instead of cash as bank trails are the most reliable proof.
