Hey, I have HRA component of monthly ~40k. I live in my parents house in Tier-2 city.
So if I make a claim of 40k as monthly rent to my parents, is there any issue that might be faced in future from the income tax department?
I will be providing parents pan card details and will adding the same in their ITR as other income source.
I know this is possible, but want to know if this big amount will cause any issues or not.
Or if anyone has been doing this earlier can you please suggest.

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If you are showing it in your parents income then no problem. But add it in the section of income/loss from let out property. Also, your company might force you to have a rental agreement if your rent exceeds 20k/pm, you can get that done to be safe.

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It's a safety measure. And isn't something a lot of trouble. 4k-5k might save you a lot of trouble in case things go south.
I recommend at least get some kind of text on a stamp paper, if you don't wanna go the agreement way.

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There are no such issues, just make sure to file their ITR
I show 60k as HRA and until now no issues

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If there are any CA’s here, please suggest.

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