Here's how to save tax on house rent allowance

The benefit will be restricted for the period only in which you have occupied a rented house. The deduction will be the least of the following:

Actual HRA received.

50 percent of the salary* in metro cities or 40 percent in the case of non-metro cities.

Rent paid in excess of 10 percent of the salary*.

You can avail the HRA benefit on the submission of rent receipts, signed by the house owner, to your employer.

In addition to the rent receipts, you will also have to provide the PAN of the house owner if the rent paid during the year is more than Rs 1 lakh.

For availing the tax benefit of HRA, you must not own the house. If you are staying in the property owned by your parents and paying rent to them, then you can claim the HRA deductions.

However, you cannot pay rent to your spouse. Hence, claiming any deductions on the same can invite scrutiny from the income tax department.

Make sure that the financial transactions related to the occupancy happen between you and your parents and you have documented those to claim HRA exemption. You have to submit the rent receipts issued by your parents to your employer for claiming the exemptions. Also, your parents will have to report rental income in their tax returns.

There are chances that a salaried individual does not have HRA as a part of his salary structure. Also, self-employed individuals might be staying in rented accommodation. Income Tax Act provides relief to those individuals through section 80GG.

An individual staying in a rented property, not having HRA as a part of his salary, can claim the deduction of the rent paid by him under section 80GG.

Deduction amount will be the least of the following under section 80GG:

Rent paid in excess of 10 percent of total income*.

25 percent of the total income*.

Rs 5,000 per month.

Long-term capital gains.

Short-term capital gains where the Securities Transaction Tax (STT) is paid. 

Deductions available under sections 80C to 80U, except section 80GG.

Many times you may have to live on rent in a city different from where you own property due to your job. In such a case you will be eligible to claim HRA deduction for the rented accommodation.

Along with this deduction, you may also be able to claim the interest paid and principal repayment on your home loan for the owned property if any. This benefit is not available in case of section 80GG.