Tax exmeption on hra

Chandru (Querist) 18 June 2012 This query is : Resolved
I know that if i am staying with my father and giving rent to my father if property belongs to him, i can claim tax exemption on HRA.

I have bought the flat and have cleared loan on that. Now can i gift deed that property to my father and start giving him rent and claim tax exemption under HRA? I am salaried employee.

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Ashish Khandelwal (Expert) 18 June 2012
yes you can do so, but make sure that the property is transferred with your fathers name and if your father is tax payee than he has to consider income from rent in there ITR.

Chandru (Querist) 18 June 2012
Thanks Ashish. Property will be transfered to my father in the form of gift deed and not as sale deed. Gift deed on property from me to my father will cost me 6000 ruppes whereas executing sale deed will cost 1.5 lacks. My dad will show rent earning under his earnings and he will fall under 10% tax bracket. I fall under 30% yax bracket. I want to do this to save tax on my salary. Is this legal?

A V Vishal (Expert) 18 June 2012
Not advisable to do such a thing.

Ashish Khandelwal (Expert) 18 June 2012
No matter what type of deed but it shuld be a registered document.

A V Vishal (Expert) 18 June 2012
Transfer for inadequate consideration

An individual who transfers a property for inadequate consideration or gifts it to his spouse, parents or minor child, other than a married daughter, will be treated as deemed owner of that property. Though legally the owner of the property is the spouse or minor child, income from that property will be treated as income of the person who has transferred the property.

Chandru (Querist) 18 June 2012
Thanks everyone for your advise.

Shonee Kapoor (Expert) 19 June 2012
I agree with Ld. Vishal on this.

Regards,

Shonee Kapoor
harassed.by.498a@gmail.com

Suhail A.Siddiqui (Expert) 19 June 2012
Git to father is not taxable under Income tax Act but this planing does not allowed by the I.T. department and claimed exemption will be added in your hand. and attract tax and penalty.

Adv.Ashwini Khatri (Expert) 20 June 2012
I agree do agree with Vishal and Mr. Shonee Kapoor on this metter. Because Here is menuculation of income. So You have not to get benefit of HRA. Thank You.

With Regard,
Ashwini Khatri
advocate.khatri@ymail.com