HRA on Rent Paid to Parents: Rules, Proof and Form 124 (2026)

The short answer

Yes, you can claim HRA exemption on rent you genuinely pay to your parents, as long as the house is owned by them (not by you), you pay the rent for real, preferably by bank transfer, and your parent shows that rent as income in their own tax return. HRA exemption is available only under the old tax regime. From FY 2026-27, the new employee declaration form (Form 124) also asks you to disclose your relationship with the landlord. Use the HRA Calculator to see how much of your HRA would be exempt.

Conditions that must all be true

Your parent owns the house. If the property is in your name, or jointly owned with you, you cannot pay rent to yourself for your own share.

You actually pay the rent. A rent receipt with no money moving is not enough. Pay by bank transfer or UPI to your parent's own account every month.

Your parent declares the rent as income. Rent received is taxable for them under "income from house property". If they do not report it, your claim and their return will not match.

You have chosen the old tax regime. The new tax regime does not allow HRA exemption, whoever the landlord is.

You receive HRA from your employer. The exemption applies to the HRA component in your salary. Self-employed people cannot claim HRA exemption.

This guide is about parents. Paying rent to a spouse is treated much more strictly, because couples normally share a home, so take professional advice before trying it.

What changed from FY 2026-27

The Income-tax Act, 2025 and the Income-tax Rules, 2026 apply from 1 April 2026. Two changes matter here:

• Form 124 replaces Form 12BB. This is the form you give your employer to declare HRA, deductions and investments. It now asks you to disclose your relationship with the landlord, so rent paid to a parent is visible to your employer and the tax department.
• More cities get the 50% limit. Mumbai, Delhi, Kolkata and Chennai are now joined by Bengaluru, Hyderabad, Pune and Ahmedabad. Other cities use 40%. See the new 50% HRA cities.

Neither change stops you from paying rent to your parents. They make it more important that the arrangement is genuine and documented.

How much HRA you can exempt

The exempt amount is the lowest of three figures:

HRA actually received

50% of basic salary plus DA (or 40% outside the eight cities)

Rent paid minus 10% of basic salary plus DA

Worked example

• Basic salary: ₹50,000 a month, no DA
• HRA received: ₹20,000 a month
• Rent paid to your mother: ₹18,000 a month
• City: Bengaluru (50%)

Limit	Monthly figure
1. HRA received	₹20,000
2. 50% of basic + DA	₹25,000
3. Rent − 10% of basic + DA	₹18,000 − ₹5,000 = ₹13,000
Exempt HRA (lowest)	₹13,000

So ₹13,000 a month (₹1,56,000 a year) of your HRA is exempt and ₹7,000 a month stays taxable. The HRA Calculator shows the same three limits side by side: enter basic salary, DA, HRA received and rent paid as monthly amounts, pick Metro (50%) or Non-metro (40%), and it highlights the lowest. It also warns you if your rent is less than 10% of salary, in which case no exemption is available.

What it means for your parent

Your mother in this example receives ₹2,16,000 of rent in the year. For tax, she can usually deduct municipal taxes she actually paid and then a standard deduction of 30% of the remaining annual value for repairs and upkeep. If she paid no municipal tax:

• Annual rent: ₹2,16,000
• Less 30% standard deduction: ₹64,800
• Taxable income from house property: ₹1,51,200

Whether the family saves tax overall depends on your parent's other income. If their total income stays below the tax-free level, the arrangement can save tax legitimately. If your parent is in the same or a higher tax slab than you, the saving may be small or nothing. Work out both returns before you start.

Documents to keep

• Rent agreement between you and your parent, with the address, rent amount and period. A simple signed agreement is the minimum.
• Monthly rent receipts. You can generate them with the Rent Receipt Generator; see how to make rent receipts for HRA.
• Bank statement or UPI records showing each payment going from your account to your parent's account.
• Your parent's PAN if the rent is more than ₹1 lakh a year. Your employer needs it, and in this example the annual rent is ₹2,16,000. Details are in when you need your landlord's PAN.
• Proof that your parent owns the house, such as the property tax receipt or sale deed, in case you are asked.

Mistakes that lead to tax notices

• Paying in cash. Cash payments are hard to prove. Use bank transfers.
• Rent that never reaches your parent's account, or money sent back to you the same day. That suggests the payment is not genuine.
• Your parent not reporting the rent. The tax department can match the landlord PAN you declared against your parent's return.
• Rent far above the local market rate. An unrealistic rent invites questions. Keep it in line with similar homes nearby.
• Claiming HRA while also claiming home loan benefits as the owner of the same house. If the house is yours, you are not a tenant.
• Claiming under the new regime. HRA exemption is not available there, so check which regime you have chosen with your employer.

If your employer did not accept the claim

If you forgot to submit proof in time, or your employer did not account for HRA, you may still be able to claim the exemption when you file your own return under the old regime, using the same documents. Keep everything for several years in case of a later query.

Quick checklist

• House owned by your parent, not you
• Old tax regime chosen
• Rent agreement signed
• Rent paid every month by bank transfer
• Parent's PAN provided if rent exceeds ₹1 lakh a year
• Relationship with landlord disclosed in Form 124
• Parent reports the rent in their return

For the full HRA calculation rules, read how HRA exemption is calculated.

This guide explains the general rules and is not tax advice.