Dear, I am drawing Rs. 35000/- in HRA which is 50% of my Basic pay. Since the HRA exemption goes unused as i am paying monthly rent only Rs. 12500/-. My Father is 80 Years old retired with income of Rs. 17000 pm pension and has now enhanced tax exemption limit. In am effort to save my tax I intend to do following. My father will buy a Studio Apartment and rent it to me at a phenomenal rate of Rs, 45000 per month through a rent agreement. I shall pay him by cheques and he will take the tax exemption. He will invest this phenomenal amount paid by me in FDs for Sr. Citizens in his name and gift the proceeds back to me. Can I save tax this way ? is there any upper limit for charging Rent ? Is there any simple method by which HRA exemption can be saved ?
Asked 2 years ago in Income Tax from Ahmedabad, Gujarat