Author: CA Meet Dhrangadhariya

Section 80DD: Deduction for Dependant with Disability, Limit and Who Can Claim

Posted on by CA Meet Dhrangadhariya

Last updated: 11 July 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • Section 80DD gives a resident individual or HUF a flat deduction of ₹75,000 for a dependant with disability (40% or more), or ₹1,25,000 for severe disability (80% or more).
  • It does not depend on the actual amount spent, but you must have spent on the dependant’s medical treatment, nursing, training or rehabilitation, or paid into an approved insurer scheme for their maintenance.
  • The dependant is the spouse, children, parents, brothers or sisters, and cannot be someone who claims section 80U for themselves.
  • From Tax Year 2026-27 the provision is section 127 of the Income-tax Act, 2025. It is available only in the old tax regime.

Section 80DD helps families who look after a dependant with a disability. A resident individual or Hindu undivided family (HUF) gets a fixed deduction from income, whatever the actual expense, provided they spent on the dependant’s care or paid into an approved scheme for the dependant’s future. It is available only under the old tax regime.

From Tax Year 2026-27 the provision is section 127 of the Income-tax Act, 2025. For FY 2025-26 (assessment year 2026-27) it is still section 80DD of the 1961 Act.

Amount of deduction

Disability of the dependant Deduction
40% or more, but less than 80% ₹75,000
Severe disability: 80% or more, including autism, cerebral palsy and multiple disabilities certified as severe ₹1,25,000

The amount is fixed. You do not need bills for the amount you claim, but you must actually have incurred the spending, or paid the scheme premium, in that year.

Conditions

  • The claimant must be a resident individual or HUF.
  • The dependant is, for an individual, the spouse, children, parents, brothers and sisters. For a HUF, it is a member of the HUF. The dependant must be dependent wholly or mainly on the claimant.
  • The claim is for a dependant, not for yourself. If you have a disability yourself, see section 80U.
  • The dependant must not claim a deduction under section 80U (section 154 in the new Act) for themselves. If they do, 80DD cannot be claimed for them.
  • You must either (a) spend on medical treatment (including nursing), training and rehabilitation of the dependant, or (b) pay or deposit an amount under an approved scheme of the Life Insurance Corporation or another insurer for the dependant’s maintenance.
  • For the insurance route, the scheme must pay an annuity or lump sum to the dependant on your death, or when you reach 60, and you must name the dependant (or a trust or other person for the dependant) to receive it.

Disabilities covered

The disability must be certified by the medical authority. The list includes blindness, low vision, leprosy-cured, hearing impairment, locomotor disability, mental retardation, mental illness, autism, cerebral palsy and multiple disabilities.

Certificate and documents

  • The disability must be certified by the prescribed medical authority, such as a civil surgeon or chief medical officer of a government hospital, or a specialist neurologist where the rules provide.
  • A copy of the certificate must be furnished with your return of income. Up to FY 2025-26 the form for autism, cerebral palsy and multiple disability was Form 10-IA. Under the Income-tax Rules, 2026 the certificate form is Form 30.
  • If the certificate says the disability needs reassessment after a period, the deduction stops after the year the certificate expires, until you furnish a new certificate.
  • If you claim the insurance route, keep the premium receipts and the policy terms.

Section 80DD vs section 80U

Basis Section 80DD Section 80U
Who claims A resident individual or HUF who supports a dependant with disability A resident individual with disability, for themselves
Amount ₹75,000, or ₹1,25,000 for severe disability ₹75,000, or ₹1,25,000 for severe disability
Both for the same person? Not allowed Not allowed
Regime Old regime only Old regime only

If the dependant dies first

If the dependant dies before you, the amount paid or deposited under the insurance scheme is treated as your income of the year in which you receive it, and is taxed.

Remember

The deduction is in addition to other deductions such as section 80C or 80D. Check your tax under both regimes, because 80DD, like most deductions, is lost in the new regime.

Frequently asked questions

How much is the deduction under section 80DD?

₹75,000 if the dependant has a disability of 40% or more, and ₹1,25,000 if the disability is severe (80% or more). It is a fixed amount, not the actual expense.

Who is a dependant for section 80DD?

For an individual, the spouse, children, parents, brothers and sisters. For a HUF, a member of the HUF.

Can I claim 80DD if the dependant claims section 80U?

No. If the dependant claims 80U for themselves, you cannot claim 80DD for the same person.

Is a medical certificate needed?

Yes. A certificate from the prescribed medical authority has to be furnished with the return.

Is section 80DD available in the new tax regime?

No. It is available only in the old tax regime.

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

Standard Deduction for Salaried Individuals in New and Old Tax Regime

Posted on by CA Meet Dhrangadhariya

Last updated: 15 September 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • The standard deduction is a flat amount subtracted from salary or pension income without any proof of expenses.
  • It is ₹75,000 in the new tax regime and ₹50,000 in the old regime, and cannot exceed your salary or pension income.
  • For family pension the deduction is ₹25,000 in the new regime and ₹15,000 in the old regime.
  • From Tax Year 2026-27 it is allowed under section 19 of the Income-tax Act, 2025.

The standard deduction is a fixed amount that salaried employees and pensioners can subtract from their income without producing any bills or proof. It was removed years ago, brought back in Budget 2018, and has been increased since, most recently in the new regime to ₹75,000.

Amount of standard deduction

Regime Salary or pension Family pension
New tax regime (default) ₹75,000 ₹25,000
Old tax regime ₹50,000 ₹15,000

In each case the deduction cannot exceed the salary or pension you actually received. These amounts apply to FY 2025-26 and to Tax Year 2026-27. The Union Budget 2026 did not change income tax rates or slabs for Tax Year 2026-27, and the standard deduction stayed as it was.

Which section gives it?

For FY 2025-26 (assessment year 2026-27) it is section 16(ia) of the Income-tax Act, 1961, whose proviso substituting ₹75,000 for the new regime applies from 01/04/2025. For Tax Year 2026-27 onwards it is section 19 of the Income-tax Act, 2025, which lists all the deductions from salary in one place.

Who can claim?

  • Employees who earn salary income, in private or government jobs.
  • Pensioners, since pension is taxed as salary.
  • Recipients of family pension, at the lower family pension amount.

It is not available for business or professional income, or to someone with no salary or pension.

Why does it matter?

  • It reduces taxable income automatically, so it lowers the tax of nearly every salaried person.
  • No documents are needed.
  • It is available in both regimes, so it does not change the choice between them, but the new regime’s higher amount is one reason many salaried taxpayers find it cheaper.

Example

Ms C earns a salary of ₹9,00,000 in FY 2025-26 and has no other income. In the new regime her taxable income is ₹9,00,000 less ₹75,000, which is ₹8,25,000. In the old regime it would be ₹8,50,000 before any other deductions.

What about the documents for filing the return?

You need no proof for the standard deduction. For the return as a whole, you should still keep Form 16, Form 26AS, the AIS and any proofs for other deductions you claim.

Frequently asked questions

What is the standard deduction for salaried employees?

₹75,000 in the new tax regime and ₹50,000 in the old tax regime, or the amount of your salary if that is less.

Do I need documents to claim the standard deduction?

No. It is allowed automatically on salary and pension income, without proof of any expense.

Can pensioners claim the standard deduction?

Yes. Pension is taxed as salary, so pensioners can claim it. Family pension has a separate deduction of ₹25,000 in the new regime and ₹15,000 in the old regime.

Can a self-employed person claim the standard deduction?

No. It is only for income taxed as salary or pension.

Which section gives the standard deduction now?

Section 19 of the Income-tax Act, 2025 from Tax Year 2026-27. Earlier it was section 16(ia).

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

MCA Compliance Relief Scheme (CCFS-2026): Complete Guide for Companies

Posted on by CA Meet Dhrangadhariya

Missed Your MCA Filings? Your Step-by-Step Recovery Plan Under CCTS-2026

The Ministry of Corporate Affairs (MCA) has introduced the Companies Compliance Facilitation Scheme, 2026 (CCFS-2026) to provide a one-time opportunity for companies to regularize pending compliances at reduced cost.

This scheme is especially beneficial for companies struggling with delayed filings and high additional fees.

Scheme Period

  • Start Date: 15 April 2026

  • End Date: 15 July 2026

Companies must act within this limited window to avail benefits.

Objective of CCFS-2026

The scheme aims to:

  • Reduce compliance burden on companies

  • Allow filing of pending annual returns and financial statements

  • Provide an opportunity to inactive companies to:

    • Become dormant

    • Close operations (strike-off)

     

  • Improve accuracy of MCA records

As per MCA, this initiative is introduced to support businesses facing financial burden due to heavy additional fees on delayed filings 

Key Benefits Under the Scheme

1. 90% Late Fee Waiver

  • Applicable on:

    • Annual Return (MGT-7 / MGT-7A)

    • Financial Statements (AOC-4 series)

     

  • Companies need to pay only 10% of additional fees

Major relief considering ₹100 per day penalty with no upper limit 

2. 75% Saving on Strike-Off

  • File Form STK-2

  • Pay only 25% of normal filing fees

Suitable for companies that want to exit business.

3. 50% Fee for Dormant Status

  • Apply via Form MSC-1

  • Pay only 50% of normal fees

Helps inactive companies maintain legal status with minimal compliance.

Forms Covered Under the Scheme

The scheme allows filing of multiple pending forms, including:

  • MGT-7 / MGT-7A

  • AOC-4 (all variants including XBRL, NBFC, CFS)

  • ADT-1

  • FC-3, FC-4

  • Old Act forms (like 23AC, 23ACA, etc.)

Immunity from Penalty (Important)

Immunity is conditional:

Available if:

  • Filing is done before notice, or

  • Within 30 days of notice

Not available if:

  • Penalty order already passed

  • 30-day window after notice has expired

In such cases, penalties remain payable even if filings are completed 

Who Cannot Avail CCFS-2026

The scheme is not applicable to:

  • Companies with final strike-off notice issued (u/s 248)

  • Companies already applied for strike-off

  • Companies already applied for dormant status

  • Companies dissolved under amalgamation

  • Vanishing companies

Important Post-Scheme Warning

After 15 July 2026:

  • ROC will initiate strict action

  • Non-compliant companies may face:

    • Penalties

    • Legal consequences

     

 Practical Insights

  • Ideal for clearing backlog at minimal cost

  • MSMEs and small companies benefit the most

  • Evaluate whether:

    • Continue business → File returns

    • Pause operations → Dormant

    • Exit → Strike-off

     

Conclusion

The CCFS-2026 is a valuable opportunity for companies to become compliant at significantly reduced cost. Missing this window may result in heavy penalties and regulatory action.

Timely decision-making is crucial.

Click here to download MCA Official Circular

Disclaimer:

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

Income Tax Rebate Under Section 87A

Posted on by CA Meet Dhrangadhariya

Last updated: 17 July 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • Section 87A gives resident individuals a rebate of up to ₹60,000 in the new regime for total income up to ₹12 lakh, so no tax is payable.
  • In the old regime the rebate is up to ₹12,500 for total income up to ₹5 lakh.
  • Marginal relief in the new regime protects taxpayers whose income is only slightly above ₹12 lakh; the old regime has none.
  • The rebate is not available against tax on special-rate capital gains in the new regime, and it is calculated before the 4% cess.

How the section 87A rebate works

1. Compute total income after the deductions allowed in your regime
↓
2. Check the limit: ₹12 lakh in the new regime, ₹5 lakh in the old regime
↓
3. Compute tax on the slab rates before cess
↓
4. Rebate is the lower of the tax and ₹60,000 (new) or ₹12,500 (old)
↓
5. If income is just above ₹12 lakh in the new regime, apply marginal relief
↓
6. Add 4% health and education cess on the tax that remains

A rebate under section 87A is a reduction in tax for resident individuals whose total income is within a set limit. Under the new tax regime the rebate is up to ₹60,000 for a total income up to ₹12 lakh, so no tax is payable. Under the old tax regime the rebate is up to ₹12,500 for a total income up to ₹5 lakh. These limits applied to FY 2025-26 (AY 2026-27). Budget 2026 did not change the slab rates, so the same limits are being applied for Tax Year 2026-27.

What is Rebate Under Section 87A?

  • The rebate is a relief for low and middle income earners. It is available only to resident individuals.
  • It reduces the income tax payable, calculated on the slab rates before adding the 4% health and education cess.
  • If the rebate equals the tax payable, the taxpayer pays no income tax at all.
  • It is not available to HUFs, companies, firms or non-residents.

Eligibility Criteria for Rebate

  1. Only resident individuals are eligible.
  2. The total income, after the deductions allowed in the regime chosen, must not exceed:
    - ₹12 lakh under the new tax regime, or
    - ₹5 lakh under the old tax regime.
  3. The rebate is the lower of the limit (₹60,000 or ₹12,500) and the tax payable before cess.
  4. Under the new regime the rebate cannot be used against tax on capital gains taxed at special rates (sections 111A, 112 and 112A).

Section 87A Rebate Limit: New vs Old Tax Regime

Particulars New regime Old regime
Total income limit ₹12,00,000 ₹5,00,000
Maximum rebate ₹60,000 ₹12,500
Standard deduction for salaried and pensioners ₹75,000 ₹50,000
Marginal relief available Yes No

Because the standard deduction in the new regime is ₹75,000, a salaried taxpayer with a salary of up to ₹12,75,000 and no other income has a taxable income of ₹12 lakh or less and pays no tax.

Why ₹12 lakh gives nil tax in the new regime

Slab Rate Tax
Up to ₹4,00,000 Nil 0
₹4,00,001 to ₹8,00,000 5% 20,000
₹8,00,001 to ₹12,00,000 10% 40,000
Total tax on ₹12,00,000 60,000
Less: rebate 60,000
Tax payable 0

How to Claim the Rebate

  1. Calculate your gross total income for the year.
  2. Reduce the deductions allowed in the regime you have chosen.
  3. Arrive at your total income and compare it with the limit (₹12 lakh or ₹5 lakh).
  4. File your return with the correct income and deductions.
  5. The income tax portal calculates the rebate automatically if your income is within the limit.

Examples

1. New tax regime

Particulars Amount (₹)
Total income 12,00,000
Tax as per slab rates 60,000
Less: rebate under section 87A 60,000
Tax payable 0

Deductions such as section 80C are not available in the new regime.

2. Old tax regime

Particulars Amount (₹)
Gross total income 6,50,000
Less: deduction under section 80C 1,50,000
Total income 5,00,000
Tax as per slab rates 12,500
Less: rebate under section 87A 12,500
Tax payable 0

Incomes Not Eligible for the Rebate

The rebate cannot be claimed against tax on:

  • Long-term capital gains under section 112A and other capital gains taxed at special rates (new regime).
  • Short-term capital gains on listed equity under section 111A (new regime).
  • Income taxed at special rates, such as winnings from lotteries and games.

Marginal Relief in the New Tax Regime

If the total income is slightly above ₹12 lakh, the tax can be higher than the extra income earned above ₹12 lakh. Marginal relief makes sure the tax payable is not more than that extra income.

How to calculate it:

  1. Find the excess over ₹12 lakh (total income minus ₹12,00,000). Call it A.
  2. Compute the tax on the total income before cess. Call it B.
  3. If B is more than A, the rebate is B minus A, and the tax payable equals A.

Example

Mr. Ravi, a resident, has a total income of ₹12,15,000 in the new tax regime.

Step Amount (₹)
Excess over ₹12,00,000 (A) 15,000
Tax on ₹12,15,000 before cess (B): 60,000 on the first ₹12 lakh plus 15% of 15,000 62,250
Rebate (B minus A) 47,250
Tax payable before cess (equal to the excess income of ₹15,000) 15,000
Add: health and education cess at 4% 600
Total tax liability 15,600

The old regime has no marginal relief, so a taxable income just above ₹5 lakh loses the whole ₹12,500 rebate at once.

Section 87A and the Income-tax Act, 2025 (now section 156)

The Income-tax Act, 2025 applies from 1 April 2026, and the rebate of section 87A is now in section 156. Sub-section (1) gives the rebate of up to ₹12,500 where total income does not exceed ₹5 lakh. Sub-section (2) gives the rebate of up to ₹60,000 where total income does not exceed ₹12 lakh and the tax is computed on the new regime slab rates of section 202. For income earned up to 31 March 2026 (FY 2025-26, AY 2026-27) the Income-tax Act, 1961 and its section 87A still apply. The rules described here are the same under both Acts.

Frequently asked questions

Who can claim the rebate under section 87A?

Only resident individuals whose total income is within ₹12 lakh in the new tax regime or ₹5 lakh in the old tax regime. HUFs, companies, firms and non-residents cannot claim it.

How much is the section 87A rebate?

Up to ₹60,000 in the new tax regime and up to ₹12,500 in the old tax regime, limited to the tax payable before cess.

Is there tax if my income is ₹12 lakh in the new regime?

No. Tax on ₹12 lakh is ₹60,000 and the rebate of ₹60,000 brings it to nil. A salaried taxpayer with a salary up to ₹12,75,000 also pays no tax after the ₹75,000 standard deduction.

What is marginal relief on the rebate?

If income is slightly above ₹12 lakh in the new regime, marginal relief limits the tax to the amount of income above ₹12 lakh. The old regime has no marginal relief.

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

Audit Trail in Accounting Software: Companies Rule 3(1), Auditor Reporting under Rule 11(g), Retention and Penalty

Posted on by CA Meet Dhrangadhariya

Last updated: 09 October 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • Every company that keeps its books in accounting software must use software that records an audit trail of each transaction, keeps an edit log of every change with its date, and cannot have the audit trail switched off.
  • The rule applies from the financial year beginning on or after 01/04/2023 (FY 2023-24), after two deferments.
  • The statutory auditor must report on it in the audit report under Rule 11(g): whether the feature existed, operated all year for all transactions, was not tampered with, and was preserved as the law requires.
  • Books of account are kept for eight financial years under section 128, and the audit trail has to be preserved for the same statutory period.

An audit trail is a time-stamped record that shows who entered or changed a transaction and when. For companies, having it in the accounting software is no longer a best practice but a legal requirement, and the statutory auditor must say in the audit report whether the company complied.

The rule for companies

The proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 says that, for a financial year beginning on or after 01/04/2023, every company which uses accounting software for maintaining its books of account shall use only such software which:

  1. has a feature of recording an audit trail of each and every transaction,
  2. creates an edit log of each change made in the books of account along with the date when the change was made, and
  3. ensures that the audit trail cannot be disabled.

The date was first 01/04/2021 and was deferred twice, finally to 01/04/2023 by the Companies (Accounts) Second Amendment Rules, 2022. For a company with a March year-end, the first year covered was FY 2023-24.

Who is covered

Every company that uses accounting software, which includes private limited companies, OPCs, Section 8 companies, and Government companies. If the books are kept entirely on paper, the rule has nothing to operate on. Accounting software can be on-premise, on the cloud, a SaaS product, hosted in India or abroad, or run by a service provider for the company. Where a separate system (say a billing or payroll tool) generates entries that become part of the books, that system needs the feature too, because its records form part of the books of account.

What the auditor reports: Rule 11(g)

Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014, read with section 143(3), requires the audit report to state in the section on other legal and regulatory requirements whether the company has used accounting software which:

  • has a feature of recording audit trail (edit log), and that feature has been operated throughout the year for all transactions recorded in the software, and
  • the audit trail has not been tampered with, and
  • the audit trail has been preserved by the company as per the statutory requirements for record retention.

The ICAI Implementation Guide expects the auditor to check whether the feature can be configured or switched off, whether it was enabled for the whole year, whether every transaction is covered, and whether the records have been kept for the statutory period. Where the books are entirely manual, the auditor states that as a fact.

How long to keep it

Section 128(5) requires books of account and the related vouchers to be kept for not less than eight financial years immediately preceding the current year (or all years, if the company is younger than eight years). The audit trail is preserved for that period, which means log storage, backup and the ability to produce the data on request.

Penalty

Section 128(6) provides that the managing director, the whole-time director in charge of finance, the Chief Financial Officer or any other person the Board has charged with complying with section 128, is liable to a fine of at least Rs 50,000 and up to Rs 5 lakh if the section is contravened. The imprisonment limb that earlier appeared in that section was omitted by an amendment effective 21/12/2020.

What a company should do

  • Ask the software vendor in writing whether the audit trail is on by default, whether any user, including an administrator, can disable it, and how long logs are kept.
  • Check the settings once a year and note the date of the check.
  • Do not delete, trim or overwrite log data to save space before the retention period ends.
  • Keep a single list of every system that feeds the books, with its audit trail status.
  • Discuss any gap with the auditor before the year closes, because a gap is reported in the audit report.

Points to check

  • This post is based on the text of the Rules as described in ICAI material, and on section 128 as reported by legal databases. Check the current text on the MCA website and in the latest ICAI guidance before you rely on it for a particular case.
  • The 2024 ICAI guide deals with detailed audit queries, such as database-level logging; follow it for your own audit file.

Frequently asked questions

Who must use accounting software with an audit trail?

Every company, including a private limited company, OPC and Section 8 company, that maintains its books of account in accounting software. Where books are kept entirely manually, the rule has nothing to apply to and the auditor reports that fact.

From when does it apply?

From the financial year beginning on or after 01/04/2023, which is FY 2023-24. The original 2021 date was deferred twice.

What must the software do?

Record an audit trail of each and every transaction, create an edit log of each change made in the books with the date of the change, and ensure that the audit trail cannot be disabled.

What does the auditor report?

Under Rule 11(g), in the report on other legal and regulatory requirements, whether the company used software with an audit trail feature, whether it operated throughout the year for all transactions, whether it was tampered with, and whether the audit trail was preserved as per statutory requirements.

How long should the audit trail be kept?

The books of account and the vouchers must be kept for at least eight financial years under section 128(5), and the audit trail is to be preserved in line with that statutory period.

Does it apply to a partnership firm or LLP?

The rule is made under the Companies Act, 2013 and applies to companies. A firm or LLP is not covered by it.

What is the penalty?

Section 128(6) provides a fine of Rs 50,000 to Rs 5 lakh on the managing director, whole-time director in charge of finance, the CFO or the person the Board has charged with complying with section 128. The words providing imprisonment were omitted in December 2020.

Official sources

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

Section 80TTA vs 80TTB: Key Differences, Benefits and How to Claim

Posted on by CA Meet Dhrangadhariya

Last updated: 27 September 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • Section 80TTA gives individuals and HUFs a deduction of up to ₹10,000 on savings account interest.
  • Section 80TTB gives resident senior citizens (age 60 or more) up to ₹50,000 on interest from savings accounts, fixed deposits and recurring deposits. A senior citizen cannot claim 80TTA.
  • Both are available only in the old tax regime, and both appear as section 153 of the Income-tax Act, 2025 from Tax Year 2026-27.
  • The deduction is not automatic: enter it in your return.

Section 80TTA and section 80TTB give a deduction on interest earned from bank and post office deposits. They are alternatives. 80TTA is for everyone else and is smaller, while 80TTB is only for senior citizens and is wider and larger. Both are available only in the old tax regime.

What is section 80TTA?

Section 80TTA allows an individual or HUF a deduction of up to ₹10,000 (or the actual interest, if less) on interest from a savings account with a bank, a co-operative bank or a post office. It does not cover interest on fixed deposits or recurring deposits. A senior citizen who claims section 80TTB cannot claim 80TTA.

What is section 80TTB?

Section 80TTB allows a resident senior citizen a deduction of up to ₹50,000 (or the actual interest, if less) on interest from savings accounts and time deposits, including fixed deposits and recurring deposits, with a bank, a co-operative bank or a post office.

A senior citizen here means a resident individual who is 60 or more at any time during the year.

Key differences

Basis Section 80TTA Section 80TTB
Who can claim Individuals and HUFs (not senior citizens claiming 80TTB) Resident senior citizens, age 60 or more
Maximum deduction ₹10,000 or actual interest, whichever is less ₹50,000 or actual interest, whichever is less
Interest covered Savings account Savings account, fixed deposit, recurring deposit
Institutions Bank, co-operative bank, post office Bank, co-operative bank, post office
Regime Old regime only Old regime only

Example

Mr B is 59 years old on 01/04/2025 and turns 60 on 15/01/2026. In FY 2025-26 he earns ₹7,000 as savings account interest and ₹20,000 as FD interest.

  • Because he is 60 at some point during FY 2025-26, he is a senior citizen for that year. He can claim 80TTB on the full ₹27,000 (below the ₹50,000 limit).
  • If he were still under 60 throughout the year, he could claim only 80TTA on the ₹7,000 savings interest, and nothing on the FD interest.

New regime

Neither section is available if you choose the new tax regime. Interest income is then simply taxed at slab rates.

Income-tax Act, 2025

From Tax Year 2026-27 both deductions are found in section 153 of the Income-tax Act, 2025, with the same limits. Budget 2025 raised the TDS threshold on interest (₹50,000 for others and ₹1,00,000 for senior citizens), but that only affects when TDS is deducted. It does not change the 80TTA and 80TTB limits.

How to claim

The deduction is not given automatically. Check your interest in the bank statements and the Annual Information Statement (AIS), then enter the amount in the deductions schedule of your return. Keep the interest certificates from the bank or post office.

Frequently asked questions

Who can claim section 80TTA?

Individuals and HUFs who are not claiming section 80TTB, up to ₹10,000 on interest from savings accounts with a bank, co-operative bank or post office.

Who can claim section 80TTB?

Only resident individuals aged 60 or more at any time during the year, up to ₹50,000 on interest from savings and time deposits.

Can a senior citizen claim both?

No. A senior citizen claims 80TTB and cannot claim 80TTA.

Is FD interest covered by section 80TTA?

No. Only savings account interest is covered. FD and RD interest qualifies only for senior citizens under 80TTB.

Are these deductions available in the new regime?

No. Both are available only in the old tax regime.

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

Section 80E of Income Tax Act: Deduction for Interest on Education Loan

Posted on by CA Meet Dhrangadhariya

Last updated: 15 September 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • Section 80E allows a deduction for the full interest paid on a higher education loan, with no upper limit.
  • It is available only to individuals, for 8 years from the year interest payment starts (or until the loan is repaid, if sooner), and only in the old tax regime.
  • The loan must be from a bank, notified financial institution or approved charitable institution, for yourself, your spouse, children or a student you are legal guardian of.
  • Only interest counts, not the principal. From Tax Year 2026-27 the provision is section 129 of the Income-tax Act, 2025.

Section 80E allows an individual to deduct the interest paid on an education loan taken for higher studies, whether for self or for close family. There is no maximum amount, but the deduction runs for a limited period and is available only under the old tax regime.

What is section 80E?

Section 80E is a deduction from total income for the interest part of the EMIs you pay on a loan taken for higher education. The principal repaid is not deductible under this section.

From Tax Year 2026-27 the same deduction is found in section 129 of the Income-tax Act, 2025. For FY 2025-26 (assessment year 2026-27) it is still section 80E of the 1961 Act.

Eligibility for the 80E deduction

  • Only individuals can claim it. HUFs, firms and companies cannot.
  • The loan must be taken for higher education of yourself, your spouse, your children, or a student for whom you are the legal guardian.
  • The loan must be taken from a bank or other financial institution, or from an approved charitable institution. A loan from friends or relatives does not qualify.
  • You must be the borrower, and the interest must actually have been paid out of your income.
  • It is available only under the old tax regime.

Which courses count as higher education?

Any course after passing the senior secondary examination (Class 12) or its equivalent, regular or vocational, in India or abroad.

How much can you claim?

The whole interest paid in the year. For example, if your income after other deductions is ₹6,70,000 and you paid ₹2,00,000 as interest on the education loan, your taxable income becomes ₹4,70,000.

For how many years?

The deduction starts in the year you begin paying interest and continues for 8 years in total, or until the interest is fully repaid, whichever is earlier. If you repay the loan in five years, you can claim for those five years only. If repayment runs beyond eight years, there is no deduction for the later years.

Documents needed

Get an interest certificate from the lender each year. It should show the interest and principal parts of the EMIs paid in that financial year separately. Keep it for your records, and give it to your employer if you want TDS adjusted.

Should you repay early?

Interest saved by repaying early is usually larger than the tax saved by claiming 80E. A deduction reduces your tax only by your slab rate (for example 30% plus cess), while the interest costs you 100%. So the tax benefit alone is not a reason to delay repayment. Consider the loan interest rate, your other investments and your cash needs, and prepay if the interest rate is higher than what you can safely earn elsewhere.

Old regime or new regime?

The new tax regime does not allow section 80E. If education loan interest is large, compare your tax under both regimes before you choose.

Frequently asked questions

Is there a limit on the section 80E deduction?

No. The whole interest paid in the year is deductible. Only the interest counts, not the principal.

For how many years can I claim section 80E?

For up to 8 years starting from the year in which you begin paying the interest, or until the interest is fully paid, whichever is earlier.

Who can claim section 80E?

Only individuals, for a loan taken for higher education of self, spouse, children or a student for whom they are the legal guardian. HUFs and companies cannot.

Does a loan from a relative or friend qualify?

No. The loan must be from a bank, a notified financial institution or an approved charitable institution.

Is section 80E available in the new tax regime?

No. It is allowed only in the old tax regime.

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

Superannuation Fund: How It Works and Tax Treatment (Tax Year 2026-27)

Posted on by CA Meet Dhrangadhariya

Last updated: 01 October 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • A superannuation fund is a trust set up by an employer to pay annuities or pensions to employees on retirement, incapacity or death; only an approved fund gets the tax benefits.
  • The employer’s contribution to an approved fund, together with the employer’s PF and NPS contributions, is tax free up to ₹7.5 lakh a year; anything above it is a taxable perquisite (section 17(1)(h)).
  • An employee’s own contribution is a section 123 deduction within the ₹1.5 lakh limit, in the old regime only.
  • Payments on death, and in commutation of an annuity on retirement or incapacity, are exempt (Schedule II, serial 8). A lump sum on leaving the job is taxed, with tax deducted at the average rate of the last three years.

A superannuation fund is a company pension arrangement. The employer sets up a trust, puts money into it each year, and the fund pays an annuity or pension to the employee after retirement. It is part of the cost to company (CTC) for many employees, so it matters to know what is taxed and what is not.

What the law requires of the fund

The Income-tax Act, 2025 gives benefits only to an approved superannuation fund. Under Schedule XI, Part B, the approving authority (a Commissioner) approves a fund that meets these conditions:

  • it is established under an irrevocable trust in connection with a trade or undertaking carried on in India, with at least 90% of the employees employed in India;
  • its sole purpose is to provide annuities for employees on retirement at or after a specified age, on incapacity before retirement, or for the widows, children or dependants on death;
  • the employer contributes to the fund; and
  • all annuities, pensions and other benefits are payable only in India.

The trustees apply to the Assessing Officer in Form 188 (Rule 313 of the Income-tax Rules, 2026). The income of an approved superannuation fund is itself exempt (Schedule VII, serial 23).

Types of plans

  • Defined benefit: the benefit is fixed by a formula (service, salary, age) and the employer carries the investment risk.
  • Defined contribution: the contribution is fixed and the benefit depends on what the fund earns, so the employee carries the investment risk.

At retirement the fund buys an annuity from an insurer. Common options are an annuity for life, for life with a guaranteed period of 5, 10 or 15 years, for life with return of the purchase price, or jointly for husband and wife.

Tax on the employer’s contribution

The employer’s contribution to an approved fund is not taxed in the employee’s hands, up to a combined limit. Under section 17(1)(h) the total of the employer’s contributions in a tax year to:

  1. a recognised provident fund,
  2. the pension scheme referred to in section 124(1) (the notified scheme, NPS), and
  3. an approved superannuation fund

is a perquisite only to the extent it is more than ₹7,50,000. The yearly interest, dividend or similar accretion on that excess is also a perquisite (section 17(1)(i), worked out under Rule 16).

Example: the employer pays ₹4,00,000 into the provident fund, ₹2,50,000 into NPS and ₹2,00,000 into the superannuation fund in the year. The total is ₹8,50,000. ₹1,00,000 is taxable as a perquisite.

If the employer instead pays a life insurance premium or buys an annuity for you, it is taxable as a perquisite, except where it goes to an approved superannuation fund, a recognised provident fund or the deposit-linked insurance fund (section 17(1)(g)).

Tax on the employee’s contribution

The employee’s own contribution to an approved superannuation fund is one of the items that qualify under section 123 (paragraph 1(g) of Schedule XV). With the other qualifying items such as provident fund and life insurance it must stay within ₹1,50,000. Section 202(2) bars Chapter VIII deductions in the new regime, so this deduction is available only in the old regime.

Tax on the money paid out

Payment Treatment
Paid on the death of a member Exempt
Lump sum in lieu of or in commutation of an annuity on retirement at or after the specified age, or on incapacity before retirement Exempt
Refund of contributions on the death of a member Exempt
Refund of contributions to an employee leaving service otherwise than by retirement or incapacity Exempt only up to contributions made before the Act’s commencement and interest on them, so in practice taxable
Transfer to the employee’s account in the notified pension scheme (NPS) Exempt
Annuity or pension received later Taxable as salary (section 16(b))
Employer’s contribution and interest paid to the employee on leaving service Taxable as profits in lieu of salary (section 18(1)(c)(ii)), with tax deducted by the trustees at the average rate of the previous three years (Schedule XI, Part B, paragraph 7)

The exempt payments are listed at serial 8 of Schedule II.

The trustees must report to the tax department each such payment made during an employee’s lifetime, within two months of the end of the financial year, giving the contribution repaid and the tax deducted.

What the employer gets

The employer’s contribution to an approved superannuation fund is deductible as an expense of business (section 29(1)(a)), subject to the limits the rules set for approval. The employer also reports its payments to the fund in the salary statement (Schedule XI, Part B, paragraph 8).

Superannuation or retirement

They are not the same thing. Retirement is leaving work at a certain age. Superannuation is a fund that helps pay for life after that.

Before you rely on this

  • Whether a payout is “in commutation of an annuity” depends on the fund rules and the insurer’s documents. Ask for a written note of how the payment is described.
  • The refund of contributions on leaving service (serial 8(d)) is exempt only up to contributions made before the Act’s commencement, so check how your fund’s payout is split between your own and the employer’s money.

Frequently asked questions

What is a superannuation fund?

A trust set up by an employer, usually with an insurer, to provide annuities or pensions to employees on retirement at a specified age, on incapacity before retirement, and to dependants on death. The employer must contribute to it.

Is the employer’s contribution taxable for the employee?

Not up to ₹7.5 lakh in a tax year. That limit covers the employer’s contributions to a recognised provident fund, the notified pension scheme (NPS) and the approved superannuation fund together. The excess, and the yearly interest or dividend on it, is a taxable perquisite.

Can I claim the employee’s contribution as a deduction?

Yes, under section 123 (Schedule XV, paragraph 1(g)) within the overall limit of ₹1,50,000 with the other qualifying items, but only in the old tax regime.

Is the pension from a superannuation fund taxable?

An annuity or pension is salary (section 16(b)) and is taxed when received. The lump sum paid in commutation of an annuity on retirement at or after the specified age, or on incapacity, is exempt.

What if I leave the job and withdraw the money?

The employer’s contribution and interest paid to you during your lifetime on leaving service is taxable, and the trustees deduct tax at the average rate you paid over the previous three years (or your period in the fund if shorter). Your own contribution is not taxed again.

Is a fund approved automatically?

No. The trustees apply to the Assessing Officer in Form 188 and the approving authority (a Commissioner) grants approval if the fund satisfies the conditions in Schedule XI, Part B of the Act. Only an approved fund gets the benefits described here.

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

Form 124 (Earlier Form 12BB): What It Is and How to Fill It

Posted on by CA Meet Dhrangadhariya

Last updated: 05 August 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • Form 124 is the statement an employee gives the employer to claim HRA, LTA, home loan interest and Chapter VIII deductions while TDS is calculated. It replaces Form 12BB from 01/04/2026.
  • It has Part A (your details) and Part B (claims and evidence), and is filed once a year with the employer. It is not uploaded on the income tax portal.
  • For HRA you give the landlord’s name, address, PAN, Aadhaar, relationship, if any, and the rent paid. Landlord PAN is a must if yearly rent exceeds ₹1,00,000.
  • If you do not submit it, the employer deducts TDS without allowing any deduction or exemption.

How to submit Form 124 to your employer

1. Check your salary structure for HRA and LTA
↓
2. Collect rent agreement, travel proofs, loan and investment documents
↓
3. Fill Part A with your name, address, PAN, contact details and tax year
↓
4. Fill Part B with the claims you want considered
↓
5. Sign the declaration and hand it to your employer, online or on paper

Every year your employer deducts tax at source (TDS) from your salary. To deduct the right amount, the employer needs to know about your rent, travel, home loan and investments. You tell the employer through a statement. Until 31/03/2026 this was Form 12BB. From 01/04/2026 under the Income-tax Rules, 2026 it is Form 124.

Form 12BB and Form 124 side by side

Old New
Form Form 12BB Form 124
Rule Rule 26C, Income-tax Rules, 1962 Rule 205, Income-tax Rules, 2026
Section Section 192 of the 1961 Act Section 392(5)(b) of the Income-tax Act, 2025

Who files it, and when?

An employee gives it to the current employer, once every financial year, as early as possible so the TDS is calculated correctly. It is only needed if you want your claims considered. If you do not submit it, the employer deducts TDS without allowing any deduction or exemption, and you can claim them later in your own return.

If you change jobs in the year, give the new employer your details of income and TDS from the old employer (Form 122), along with a fresh Form 124.

What does the form contain?

Part A: employee details. Name, address, PAN, email id, contact number and tax year.

Part B: claims and evidence.

  1. House rent allowance: name and address of the landlord, landlord’s PAN, Aadhaar, relationship with the landlord (if any) and the rent paid. Give a copy of the rent agreement.
  2. Leave travel concession or assistance: the travel details, with documents supporting the claim.
  3. Interest on borrowing: name and address of the lender, lender’s PAN where available and the interest paid or payable. Give a copy of the loan agreement.
  4. Deductions under Chapter VIII (A and B): the sections you claim, for example section 123 (the old section 80C), section 124 (NPS), section 129 (education loan interest), section 130, section 131 and section 153 (interest on deposits), with proofs.
  5. Other details as an annexure.

Then comes your declaration that the information is complete and correct.

Landlord PAN

The PAN of the landlord must be furnished if the rent in the year is more than ₹1,00,000. Aadhaar is not mandatory unless your employer asks for it.

Do I file it on the portal?

No. Form 124 goes to your employer, electronically or on paper. It is not uploaded separately on the income tax portal.

Before you fill it

  • Check that HRA and LTA are part of your salary structure. If they are not, there is nothing to claim.
  • Collect the rent agreement and rent receipts, travel tickets, the home loan interest certificate and the investment proofs.
  • Remember that most of these claims work only in the old tax regime. Tell your employer which regime you choose.

Documents you may need

Claim Supporting document
House rent allowance Rent agreement, rent receipts or bank proof, landlord’s PAN if rent is above ₹1,00,000 a year
Leave travel allowance Tickets, boarding passes or invoices
Home loan interest Loan agreement and the lender’s interest certificate
Section 123 items: PPF, ELSS, life insurance, tax-saver FD, NSC, tuition fees Receipts, certificates, passbook
Health insurance premium (80D) Premium receipts
Education loan interest Lender’s certificate showing interest paid
Disability deductions Medical authority’s certificate
Donations Valid receipts in your name

A few tips

  • If you pay rent to your parents, make the payments by bank transfer and ask them to show it as income in their return.
  • Do not submit false rent receipts. It can lead to action by the tax department.
  • Declare only what you really expect to spend. If you do not invest later, your TDS may be short and you will pay more tax when you file.
  • You can still claim missed deductions in your return, so do not worry if you could not give every proof to your employer.

Frequently asked questions

What is Form 124?

A statement showing particulars of claims by an employee for deduction of tax at source under section 392(5)(b) of the Income-tax Act, 2025, read with Rule 205 of the Income-tax Rules, 2026. It replaces Form 12BB.

Is Form 124 compulsory?

No. You file it only if you want the employer to consider your deductions and exemptions while computing TDS.

Do I upload Form 124 on the income tax portal?

No. You give it to your employer, in electronic or physical form.

Is landlord PAN compulsory?

Yes, if the yearly rent exceeds ₹1,00,000. Aadhaar is not compulsory unless the employer asks for it.

Do I need Form 124 for the standard deduction?

No. The standard deduction is allowed in every case.

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

Relief on Salary Arrears: Section 157(1) (Earlier Section 89(1)), Rule 73 and Form 39

Posted on by CA Meet Dhrangadhariya

Last updated: 31 July 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • If you receive salary arrears, advance salary or family pension arrears and pay a higher rate of tax because of it, you can claim relief under section 157(1) of the Income-tax Act, 2025, earlier section 89(1).
  • Relief is the extra tax caused by the arrears in the year of receipt, less the tax the same arrears would have caused in the years they relate to, if the first is bigger.
  • From 01/04/2026 the claim is made in Form 39 (earlier Form 10E), under Rule 73 of the Income-tax Rules, 2026, by the return due date, or to the employer.
  • The same rule gives relief on gratuity of 5 years or more of service, retrenchment compensation and commuted pension.

Arrears are salary for earlier years that you receive in a later year. Because tax rates rise with income, receiving three years of arrears in one year can push you into a higher slab. The law corrects for this by giving relief. From Tax Year 2026-27 it is section 157(1) of the Income-tax Act, 2025, the calculation is in Rule 73 of the Income-tax Rules, 2026, and the claim form is Form 39. Up to FY 2025-26 it is section 89(1), Rule 21A and Form 10E.

When does the relief apply?

When your total income for the year of receipt is taxed at a higher rate than it would otherwise have been, because of receipts such as:

  • salary received in arrears or in advance, or family pension in arrears (the “additional salary”),
  • gratuity for past service of five years or more,
  • retrenchment compensation (where Rule 73 provides), and
  • commutation of pension.

For other receipts, the Board may allow relief it considers fit.

How is relief on arrears calculated? (Rule 73)

Relief is A minus B, if A is more than B.

  1. Work out which tax years the additional salary relates to, and how much relates to each.
  2. A, the extra tax in the year of receipt: tax on total income of the year of receipt, less tax on that income reduced by the arrears.
  3. B, the tax the arrears would have attracted in the years they relate to: for each such year, tax on the total income of that year increased by the arrears for that year, less tax on the total income of that year as it stood. Add up the figures for all the years.
  4. If A is more than B, the difference is your relief. If B is the same or more, there is no relief.

Example

Meena’s total income for FY 2026-27 is ₹10,00,000, which includes ₹2,00,000 of arrears relating to FY 2025-26. Her income for FY 2025-26 was ₹6,00,000.

Step Tax in ₹ (old regime slabs, before cess)
Tax on ₹10,00,000 in FY 2026-27 1,12,500
Tax on ₹8,00,000 (without the arrears) 72,500
A: extra tax in FY 2026-27 40,000
Tax on ₹8,00,000 in FY 2025-26 (income plus arrears) 72,500
Tax on ₹6,00,000 in FY 2025-26 32,500
B: tax the arrears would have attracted in FY 2025-26 40,000
Relief (A minus B) Nil

Here the slab rate is the same in both years, so the arrears cost the same tax either way and no relief arises. Relief appears when the earlier year’s income was low enough that the arrears would have been taxed at a lower rate there. Rebate under section 156 and cess are also taken into account in a real computation, which these figures leave out.

Relief on gratuity

For gratuity received for past service, the relief is the gratuity multiplied by the excess of the average tax rate in the year of receipt over a blended average of the two or three earlier years:

  • Service of 5 years or more but under 15 years: compare the average rate on total income including the gratuity in the year of receipt with the average of the rates for the two preceding years, each computed on that year’s income plus half of the gratuity.
  • Service of 15 years or more: compare with the average of the rates for the three preceding years, each computed on that year’s income plus one third of the gratuity.
  • Relief is allowed only if the average rate in the year of receipt is higher.

Commutation of pension and retrenchment compensation follow the same pattern with their own fractions in the rule.

Form 39 and how to claim

  • To claim relief under section 157(1), furnish the particulars in Form 39 on or before the due date for filing the return of income (section 263(1)(c)).
  • A Government servant or an employee of a company, co-operative society, local authority, university, institution, association or body can instead give the particulars to the person who pays the salary, so that the employer allows the relief in deducting tax.
  • Form 39 replaces Form 10E. The form asks for the tax years to which the additional salary relates, the amount for each year, the total income and tax payable for each year with and without the arrears, and the relief worked out.
  • Up to FY 2025-26, Form 10E is filed online on the e-filing portal under e-File, Income tax forms, File Income Tax Forms, in the tab for persons not having business or professional income. A return claiming relief without the form may get a notice saying the relief has not been allowed.

Things to remember

  • Keep the arrears statement from your employer and the computation for each year to which the arrears relate.
  • Relief reduces tax; it does not reduce income. The relief is shown in the return.
  • Arrears are taxed in the year of receipt, not the year they relate to. The relief is how the law evens it out.

Frequently asked questions

What is relief under section 89(1)?

Relief for the extra tax you pay because arrears or advance salary, or arrears of family pension, bump you into a higher rate in the year you receive them.

What is the section number from Tax Year 2026-27?

Section 157(1) of the Income-tax Act, 2025, with the calculation in Rule 73 of the Income-tax Rules, 2026.

Which form do I file?

Form 39 from 01/04/2026. Up to FY 2025-26 it is Form 10E.

When must the form be filed?

On or before the due date for the return under section 263(1)(c). A salaried employee can also give the particulars to the person who pays the salary.

Can I get relief on gratuity or commuted pension?

Yes. Rule 73 also gives relief on gratuity for past service of 5 years or more, retrenchment compensation and commutation of pension, where the extra receipt pushes your rate up.

Official sources

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.