How to claim tax relief on HRA receipts?

I am 28 years unmarried and residing in Tumakuru. I stay in a rented apartment and want to claim tax relief on HRA receipts. Many of my friends present fake rent receipts to make the claim. I am tempted to do the same but after demonetization, income tax department is very strict. Is there any other way to claim tax relief? Please advise.

Asked by : Ramesh - Tumakuru | 339 Views

You already know submitting rent receipts to your company’s human resource department can help you save taxes. But, what you may not know is that submitting a fake rent receipt can put you in trouble with income tax department. A recent judicial pronouncement has given powers to your assessing officer to check all your documents to see whether the House Rent Allowance (HRA) claimed by you is genuine or fake. Follow these tips to legitimately claim HRA tax exemption: 1. As far as possible do not pay rent in cash. Even if you are paying electricity and water bill, we suggest you pay through the bank. Preserve the copies of bills and rent receipts. But if you still have to pay in cash then put a stamp of Re 1 on the rent receipt. This documentation is a must while claiming HRA. 2. Whenever you take a house on rent, go one step further and sign a rent agreement with your landlord. Ensure that all the details of your terms with your landlord should be stated very clearly in the agreement. 3. If you are paying rent of more than Rs 50,000 a month, you are now required to deduct tax at source (TDS). The tax department is increasingly leveraging technology to keep a watch on tax-payers. In case, you had claimed fake HRA, then avoid trouble at the time of filing your income tax return. So, when you are filing your income tax return pay the tax that you had saved under the curtain of fake rent receipt.