I work in IT Sector and around Rs 7200 is deducted from my salary annually and for escaping from tax I have done life insurance so now after doing life insurance only 3600 is deducted annually I can escape the other 3600 if I show HRA to my company but I live in my parent’s home so I don’t pay rent to my parent but I give some part of salary to my parents. So my question is doing insurance for escaping from Tax is right or wrong and is Shariah allows me to show HRA to company in this particular case for escaping from tax.
Answer
(Fatwa: 216/180/H=1434)
It is unlawful to produce HRA fraudulently, it is sinful. If you are living in your parents’ house, there is no issue if you have dealing of rent with your parents in clear terms, and then you get tax exception on HRA basis. It is allowable for you to have rental dealing with your parents.
(N) It is also lawful to resort to life insurance in order to avert taxation, but one will have to give the additional amount in charity to the poor without an intention of reward. It should not be used in personal needs.
Allah (Subhana Wa Ta’ala) knows Best
Darul Ifta,
Darul Uloom Deoband