I know that we can pay rent to our parents and claim deductions with rent receipt as proof, and it also requires to transfer the money digitally to be in safer side.
So what if I transfer the money as rent to my parents and after 2 days my parents transfer the same amount back to me as gift. I know that amount transferred from parents to son/daughter is not taxable and there is no limit cap for this.
So in this way I can get hra exemption and as well as get my money paid as rent back. So is this legal or is there any law which will prevent me from doing this
The amount that you paid to your parents as rent will be taxable to them as Income from House Property. The motive is to get the amount taxed. These transaction of rent paid and gift received will be treated separately. There is no particular section which will prevent you from this.
However we suggest you to a have clarification for the same in case the IT Department questions the transaction.