HRA tax benefit if your parent is also in the 30% bracket like you
A number of people pay rent to their parents for the purpose of claiming HRA deduction to save taxes.
However, contrary to popular belief, this also helps even if your parent receiving the rent and yourself, both are in the 30% bracket.
Only 70% of the amount received as rent by someone is taxable as they get a 30% standard deduction on the total amount of rent received. This means that despite being in the 30% bracket, your parent may end up paying only 21% tax on the rental income (i.e. 70% of 30%) while you save your tax provided your rent amount is optimised best for HRA benefit purposes.
