Can You Claim TDS Deductions for Rent Paid to Family Members Like Parents or Grandparents?

Dear Seniors, In my company, there are a few employees who are submitting house rent receipts in the names of their mother, father, and grandmother as investment proof for TDS deduction. Kindly advise if this practice is acceptable given the blood relation. Awaiting your response.

Thanks,
Ravita

House Rent Reimbursement and TDS Calculation

House rent reimbursement is given only in the name of the employee in TDS Calculation. If any employee has borrowed a housing loan, then a repayment schedule is required. If anybody is the rent payee, then a rent agreement is required.

Salary and Allowances Breakdown

- **Particulars**: Earning, Deduction, Taxable
- **Salary**: 289,400, 289,400
- **HRA**: 151,250, 151,250
- **Conveyance**: 118,350, 9,600, 108,750
- **Children Education Allowance**: 12,000, 0, 12,000
- **Special Allowance**: 18,000, 0, 18,000
- **Welfare Allowance**: 5,000, 0, 5,000
- **Total**: 594,000, 9,600, 584,400

Deduction Under Section 80C

- **P.P.F./E.P.F.**: 2,000
- **L.I.P.**: 32,407
- **Saving Bond**
- **NSC**
- **Repayment of Principal of Home Loan**
- **Infrastructure Bond**
- **5 Year F.D.**
- **ULIP**
- **Total Deduction**: 34,407

Taxable Income from Salary

- **Taxable income from Salary**: 549,993

Income From House Property

- **Deduction U/s 24(b)**
- **Interest paid on repayment of Home Loan**: 0
- **Taxable Income from house property**: 0

Income from Other Sources

- **Total Taxable Income**: 549,993

Computation of Income Tax

- **Up to 160,000**: 160,000, 0, 0
- **From 160,000-500,000**: 340,000, 10%, 34,000
- **From 500,000-800,000**: 47,593, 20%, 9,519
- **Above 800,000**: 30%
- **Income Tax**: 43,519
- **Education Cess**: 870
- **SHE Cess**: 435
- **Total Tax Deductible**: 44,824

Regards,

Yes, it is acceptable. They can show the house rent receipt as investment proof until the employee has their own residence, as per Section 10(13A) read with Rule 2A. At least three will be exempted.

House Rent Allowance (HRA) Received:

- 50% of salary in case the residential accommodation taken on rent is situated in Bombay, Calcutta, Delhi, or Madras (Chennai), and 40% of salary in any other case.
- Rent paid in excess of 10% of salary.