Dummy Rent Agreement works?

You can pay rent to your parents. But then they'd need to show that in their income because it'll be counted on their Pancard.

Many people do this. Don't worry.

Dummy rent receipt might not always work unless you are willing to cross 1lakh rent in 1 year in which case you will need to furnish your land lord's PAN details.

So.. here is the rule you might need to keep in mind: Rent Paid should be greater than 10% of basic salary + DA.

In detail: As per Rule 2A, the least of the following is exempted from salary under Section 10(13A) and does not form part of the taxable income.
Actual HRA received from the employer For those living in metro cities: 50% of (Basic salary + Dearness allowance) For those living in non-metro cities: 40% of (Basic salary + Dearness allowance) Actual rent paid minus 10% of (Basic salary + Dearness allowance)

If you are doing this ensure

1. Pay your parents monthly the rental amount.
2. Enter into an agreement with them as Co -owners if their income is not in tax bracket or lower tax bracket than yours 3. If the rent is greater than 1Lakh PA you need to report their PAN to employee which in turn reflects in their AIS statement. Hence file ITR for your parents declaring rental income.
3. They can claim property tax paid and 30% of rental income as standard deduction . So if they are not having any other income you can pay up to 10 Lakhs each without having any tax burden on them.
4. But keep in mind as commented by above by @BangaloreLandLord the deductions depends on your Basic Salary and HRA component

I just pay 30k to my dad as House rent

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