Tax Planning

How to Claim HRA Exemption by Paying Rent to Parents Legally

August 02, 2026 • 6 min read

Salaried IT professionals living in family-owned properties can legally optimize their tax outgo by paying rent to their parents and claiming House Rent Allowance (HRA) exemption under Section 10(13A) of the Income Tax Act.

Mandatory Rules to Claim HRA via Parents

Property Ownership: The property must be registered solely in your parent's name. You cannot claim HRA if you are a co-owner.

Parental Income Tax Return: Your parent must report the rent as rental income under 'Income from House Property' on their ITR, where they can claim a 30% standard deduction.

Formal Documentation: Ensure a formal rent agreement is executed, rent is transferred via banking channels, and rent receipts are maintained.

How Much HRA Can You Exempt?

HRA exemption is calculated as the minimum of: actual HRA received, rent paid minus 10% of basic salary, or 50% of basic salary for metro cities (40% for non-metros).

Calculate your exact HRA exemption and compare tax savings using our Income Tax Calculator.

Comparing HRA Savings vs New Tax Regime

Because HRA exemption is only available under the Old Tax Regime, test whether your HRA savings outweigh the lower slab rates of the New Regime on our Income Tax Calculator.