Category: Income Tax

Leave Travel Allowance (LTA): Exemption Limit, Rules, How to Claim and Eligibility

Posted on by CA Meet Dhrangadhariya

Last updated: 06 September 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • LTA is a tax-free reimbursement of the actual fare for travel within India, given by your employer for you and your family, in the old tax regime only.
  • The exemption is for two journeys in a block of four calendar years. The block 2022 to 2025 has ended and the new block is 2026 to 2029.
  • Only the fare is exempt: hotel, food, local travel and sightseeing are not. Travel abroad does not qualify.
  • Rail is limited to AC first class; where there is no rail or public transport, the rules set other limits, including ₹30 a km where no public transport exists.

Leave Travel Allowance (LTA), also called Leave Travel Concession (LTC), is an amount your employer gives you to travel with your family within India. The travel fare is exempt from tax, up to the limits in the rules, if you are in the old tax regime.

Where is it in the law?

For FY 2025-26 (assessment year 2026-27) LTA is exempt under section 10(5) of the Income-tax Act, 1961 and Rule 2B. From Tax Year 2026-27 it is in the Schedule III of the Income-tax Act, 2025 (Table Sl. No. 8), with the conditions in Rule 278 of the Income-tax Rules, 2026.

Who can claim?

An individual who gets travel concession or assistance from an employer (or a former employer, for travel after retirement or termination of service) for self and family, for travel to any place in India. Family includes the spouse, children, and dependent parents, brothers and sisters.

What is exempt?

Only the amount actually spent on the fare, subject to these limits:

  • By air: the fare for the class to which the employee is entitled (under the 1961 Act rule, the economy fare of the national carrier), by the shortest route.
  • By rail, or any other mode where the places are connected by rail: the AC first class rail fare by the shortest route.
  • Where the places are not connected by rail and a recognised public transport system exists: the first class or deluxe class fare by the shortest route.
  • Where no recognised public transport exists and no rates are prescribed: ₹30 per km for the shortest route.

Hotel, food, local conveyance, sightseeing and shopping are not exempt. The exemption cannot be more than what your employer gives you.

Two journeys in a block of four years

The exemption is for two journeys in a block of four calendar years. The blocks so far: 2018 to 2021, 2022 to 2025. The new block is 2026 to 2029, and the next is 2030 to 2033.

Carry-over of an unused journey

If you did not use the exemption in a block, the journey you first avail in the first calendar year of the next block is also exempt. It does not count against the two journeys of that new block. So for the block that ended in 2025, an unused journey can be claimed for a journey you make in 2026.

Children

The exemption is for not more than two surviving children. The limit does not apply to children born before 01/10/1998, or to additional children from multiple births after the first child.

Example

Ms Ankita travelled to Shimla in December 2025 with her husband and two children (four persons). The air fare was ₹10,000 each way per person, which equals the admissible fare. Her employer paid ₹50,000 as LTA.

  • Fare actually spent: ₹10,000 x 4 x 2 = ₹80,000.
  • LTA received: ₹50,000.
  • The exemption is the lower figure, ₹50,000, if she is in the old regime. Under the new regime nothing is exempt.

A trip to Dubai is not eligible, because the travel must be within India.

How to claim

  • Your employer sets a date for you to submit tickets, boarding passes or invoices and a declaration. The exempt amount then shows in Form 16.
  • If you did not claim it with your employer, you can still claim it when you file your return, in the exempt allowances part of the salary schedule. Keep your tickets and proofs.

LTA in the new tax regime

LTA is not available in the new regime. File your return on time under the old regime if you want it, because a person without business income chooses the old regime along with the return furnished by the due date.

Common mistakes

  • Claiming hotel, food or sightseeing costs.
  • Claiming travel outside India.
  • Claiming more than two journeys in a block, or for more than two children born after 01/10/1998.
  • Not keeping tickets and invoices.
  • Claiming the whole route when you visited several places: only the shortest route from the starting point to the destination counts.
  • Assuming that any holiday travel is covered. Some employers allow LTA only if you take leave and travel in that period, so follow your employer’s policy.

Frequently asked questions

How many LTA journeys are exempt?

Two journeys in a block of four calendar years. The current block runs from 2026 to 2029.

Can I claim LTA for foreign travel?

No. The exemption is only for travel to places in India.

What expenses are covered?

Only the fare for the travel. Hotel, food, local conveyance and sightseeing are not exempt.

Can I carry over an unused LTA journey?

Yes. If a journey was not availed in a block, one journey can be claimed in the first calendar year of the next block, in addition to the two journeys of that block.

Is LTA 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.

How to Reach the ₹1,50,000 Section 80C Limit Without New Investments

Posted on by CA Meet Dhrangadhariya

Last updated: 30 July 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • You may already be near the ₹1.5 lakh section 80C limit through payments you make anyway: EPF, life insurance premium, home loan principal, children’s tuition fees, and stamp duty on a house.
  • Add up these items first, then invest only the gap, if any.
  • Section 80C is available only in the old tax regime and is section 123 of the Income-tax Act, 2025 from Tax Year 2026-27.
  • Declare the items to your employer in Form 124 (earlier Form 12BB) so TDS is adjusted.

How to check your 80C position

1. Note your EPF contribution for the year
↓
2. Add home loan principal repaid and stamp duty if you bought a house
↓
3. Add children’s tuition fees (up to two children)
↓
4. Add life insurance premiums that qualify
↓
5. Subtract the total from ₹1,50,000 and invest only the balance

Every March someone suggests that you must invest in a tax-saving scheme to use up section 80C. Before you do, check what you have already paid during the year. Many ordinary payments qualify, and you may have used most of the ₹1,50,000 limit without any new investment.

Section 80C works only in the old tax regime. From Tax Year 2026-27 it is section 123 of the Income-tax Act, 2025, with the same ₹1.5 lakh limit.

Step by step

  1. Employees’ Provident Fund. Your own contribution to EPF during the year counts. Check your salary slip or EPF passbook. For many salaried people this alone is a large amount.
  2. Home loan principal. The principal part of your EMIs counts. Your lender’s certificate shows it.
  3. Stamp duty and registration. If you bought a house, the stamp duty and registration charges paid in that year count.
  4. Children’s tuition fees. Tuition fees for full time education of up to two children in India count, including playschool and preschool fees if they are tuition fees. Development fees, donations and transport do not.
  5. Life insurance premium. Premiums on a policy for yourself, your spouse or your children count. The premium should be within 10% of the sum assured for policies issued after 31/03/2012 (15% for a disabled person or specified diseases).
  6. Employee’s NPS contribution under section 80CCD(1) also counts within the same limit.
  7. Add them up and subtract the total from ₹1,50,000. The result is the balance of the limit.
  8. Invest only the balance, if any, in a product that suits your risk and your time horizon, such as PPF, ELSS, NSC, a 5 year tax-saver FD, Senior Citizens’ Savings Scheme or Sukanya Samriddhi Yojana.

Example

Priya’s EPF contribution is ₹72,000. She repaid ₹48,000 of home loan principal and paid ₹20,000 of tuition fees for one child. The total is ₹1,40,000, so only ₹10,000 of the limit is left. She does not need to invest ₹1.5 lakh in ELSS.

Who can claim?

Individuals (resident or non-resident) and Hindu undivided families can claim section 80C. Companies, firms and LLPs cannot.

How to claim

Give your employer a declaration in Form 124 (earlier Form 12BB) with proofs, so that less TDS is deducted. EPF is usually already known to the employer. If you did not declare it, you can claim the deduction when you file your return, as long as you are in the old regime and file on time.

What not to do

  • Do not buy a product only because the limit is unfilled. Choose it for the return, lock-in and risk.
  • Do not forget that a home loan principal or stamp duty claim is reversed if you sell the house within five years of getting possession.
  • Do not assume this works in the new tax regime. If you move to the new regime, 80C is lost altogether, so compare your total tax first.

Frequently asked questions

Can I reach the section 80C limit without investing?

Often, yes. EPF, life insurance premium, home loan principal, tuition fees and stamp duty can already add up to ₹1.5 lakh.

Do I need to invest more once the limit is reached?

No. The deduction is capped at ₹1.5 lakh, so extra investment under 80C does not reduce tax further.

Is my EPF counted?

Yes, your own contribution to the Employees’ Provident Fund counts.

Which tuition fees count?

Tuition fees for full time education of up to two children in India. Development fees and donations do not count.

Is 80C 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.

What are the 5 Heads of Income Tax?

Posted on by CA Meet Dhrangadhariya

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

Quick summary

  • All income is sorted into five heads: salary, house property, profits and gains of business or profession, capital gains, and income from other sources.
  • Each head has its own rules for what is taxable and which expenses and deductions are allowed.
  • Capital gains are taxed by holding period and asset type, for example 12.5% on long-term gains from most assets sold on or after 23 July 2024.
  • Correct classification decides how tax is computed and which ITR form you file.

Under the Income Tax Act, all income is sorted into five heads of income: salary, house property, profits and gains of business or profession, capital gains, and income from other sources. Each head has its own rules for what is taxable and which expenses and deductions are allowed. Putting each income under the correct head is the first step in computing tax and in choosing the right ITR form. The five heads continue under the Income-tax Act, 2025 (from 1 April 2026), although section numbers have changed. Section numbers quoted below are those of the 1961 Act.

The Five Heads of Income

  1. Income from Salary
  2. Income from House Property
  3. Profits and Gains of Business or Profession
  4. Capital Gains
  5. Income from Other Sources

1. Income from Salary

Salary is income received under a contract of employment. It includes basic pay, allowances, advance salary, bonus, commission, perquisites, gratuity, leave encashment and pension.

  • Section 15 describes what is taxable as salary.
  • Section 16 gives the deductions from salary, mainly the standard deduction.
  • Section 17 defines salary, perquisites and profits in lieu of salary.

Some allowances are exempt in the old regime, for example House Rent Allowance (HRA) for those living in rented houses. A transport allowance of up to ₹3,200 per month for certain specially-abled employees (Rule 2BB) is exempt in both regimes. The new regime allows very few other exemptions but gives a standard deduction of ₹75,000 (₹50,000 in the old regime).

2. Income from House Property

Rent from a building or land attached to it is taxed under this head. The tax is computed on the annual value of the property, less municipal taxes and the standard deduction of 30%, less interest on a home loan.

There are three kinds of property:

  1. Self-occupied property
  2. Let-out property
  3. Deemed let-out property

Up to two self-occupied houses are treated as self-occupied with nil annual value. Any other house is treated as deemed let-out. Interest on a loan for a self-occupied house is allowed up to ₹2 lakh in the old regime. Income from a house property is reported in Schedule HP of the ITR.

3. Profits and Gains of Business or Profession

Profits from any business or profession are taxed under this head after deducting the expenses allowed. It covers:

  • Profits of a trade, manufacture or service business, and professional income.
  • Income taxed under the presumptive schemes of sections 44AD, 44ADA and 44AE.
  • Profit or loss from futures and options trading and intraday trading in shares (speculative income is treated separately).
  • Salary, bonus, commission and interest received by a partner from the firm, to the extent allowed.
  • Certain incentives, licences and export benefits connected to the business.

Individuals and HUFs with business or professional income file ITR-3, or ITR-4 under the presumptive scheme.

4. Capital Gains

Profit from selling a capital asset such as property, shares, mutual funds, gold or bonds is taxed under capital gains. The gain is short-term or long-term, depending on how long the asset was held.

Asset Held for long-term if more than Short-term gain tax Long-term gain tax (sale on or after 23 July 2024)
Land and building 24 months Slab rates 12.5% without indexation
Unlisted shares 24 months Slab rates 12.5% without indexation
Listed shares and equity mutual funds 12 months 20% 12.5% on gains above ₹1.25 lakh a year
Other assets such as gold 24 months Slab rates 12.5% without indexation
Debt mutual funds bought after 1 April 2023 Not applicable Slab rates Slab rates

For land and buildings bought before 23 July 2024, resident individuals and HUFs can choose to pay 20% with indexation instead of 12.5% without it. Capital gains are reported in Schedule CG, and individuals with capital gains generally file ITR-2 or ITR-3.

5. Income from Other Sources

Anything that is taxable but does not fall under the four heads above comes here. Common examples are interest on savings accounts and fixed deposits, dividends, winnings from lotteries and games, gifts above the limit, and rent from plant, machinery or furniture when it is not business income.

Heads of Income vs Sources of Income

A source of income is where the money comes from, for example a salary, a fixed deposit, a rented flat or a business. A head of income is the tax category the Act puts that source into. Many sources can fall under one head, and each head has its own computation rules.

Conclusion

Knowing the five heads helps you report each income in the right place, claim the deductions that belong to it and file the correct ITR form. Consult a qualified professional if an income is difficult to classify.

Frequently asked questions

What are the 5 heads of income?

Income from salary, income from house property, profits and gains of business or profession, capital gains, and income from other sources.

Which head does interest income come under?

Interest on savings accounts and fixed deposits is taxed under Income from Other Sources, unless it is a business receipt.

What is the difference between a head and a source of income?

A source is where the money comes from, such as a job or a rented flat. A head is the tax category the Act puts that source into.

Do the five heads continue under the Income-tax Act, 2025?

Yes. The five heads continue from 1 April 2026, with new section numbers.

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.

How to Save Tax Other Than 80C: Deductions and Exemptions for 2026-27

Posted on by CA Meet Dhrangadhariya

Last updated: 25 July 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • Besides section 80C, you can save tax through NPS (₹50,000 extra), health insurance (up to ₹1 lakh), home loan interest, education loan interest, donations, rent, disability and treatment deductions, and exempt life insurance maturity.
  • Most of these work only in the old tax regime. In the new regime the standard deduction (₹75,000) and the employer’s NPS contribution are the main benefits.
  • Each deduction now has a new section number in the Income-tax Act, 2025 from Tax Year 2026-27: for example 80D is section 126 and 80E is section 129.
  • Compare your tax under both regimes before you choose.

Section 80C is the best known deduction, but it is only one of many. If you are in the old tax regime, these other sections can reduce your tax further. From 01/04/2026 the Income-tax Act, 2025 applies, and each deduction has a new section number, shown below.

Deductions other than 80C

Deduction Limit Section in 1961 Act Section in 2025 Act
Own contribution to NPS ₹50,000, over and above 80C 80CCD(1B) 124(3)
Health insurance, preventive check-up, medical for senior citizens ₹25,000 self and family (₹50,000 if senior), ₹25,000 for parents (₹50,000 if senior); preventive check-up ₹5,000 within these 80D 126
Dependant with disability ₹75,000 or ₹1,25,000 80DD 127
Treatment of specified diseases ₹40,000 or ₹1,00,000 (senior citizen) 80DDB 128
Education loan interest Whole interest, 8 years 80E 129
First-time buyer home loan interest (loans of FY 2016-17) ₹50,000 80EE 130
Donations 100% or 50%, with a 10% limit for some 80G 133
Rent without HRA Up to ₹60,000 80GG 134
Contributions to political parties Whole amount, other than cash 80GGC 137
Savings account interest ₹10,000 80TTA 153
Deposit interest, senior citizens ₹50,000 80TTB 153
Person with disability ₹75,000 or ₹1,25,000 80U 154

Chapter VIII of the 2025 Act contains these deductions. The loan interest deduction for electric vehicles (80EEB) ended for loans sanctioned after 31/03/2023, and the additional affordable housing interest (80EEA) was for loans sanctioned up to 31/03/2022.

Other ways to save tax

  • Home loan interest: up to ₹2 lakh a year on a self-occupied house (section 24(b) of the 1961 Act, section 22 of the 2025 Act). On a let-out house the whole interest is deducted against the rent, with the loss set-off limited to ₹2 lakh a year.
  • Exempt allowances and HRA: HRA, LTA, children education allowance and others reduce taxable salary in the old regime.
  • Exempt insurance proceeds: the maturity amount of a life insurance policy is exempt if the premium conditions are met: for policies issued from 01/04/2012, premium up to 10% of sum assured (15% for special policies), and for policies issued on or after 01/04/2023 the total premium must be below ₹5 lakh a year, or below ₹2.5 lakh for unit linked policies.
  • Agniveer Corpus Fund: the whole contribution is deductible.

Employer contribution to NPS

If your employer contributes to your NPS account, the contribution is deductible up to 10% of salary (14% for Government employers) in the old regime. In the new regime the limit is 14% for all employers. This is the one major deduction that works in both regimes.

What works in the new tax regime?

  • Standard deduction: ₹75,000 for salary and pension (₹25,000 for family pension).
  • Employer’s NPS contribution, up to 14% of salary.
  • Interest on a let-out house against its rent.
  • Contribution to the Agniveer Corpus Fund.
  • Travel, daily charges and conveyance allowances, and the disabled employee’s transport allowance.

Old or new regime?

Add up all deductions and exemptions you can claim. If they are large enough (for example HRA, 80C, 80D and home loan interest together), the old regime can still cost less. If they are small, the new regime usually wins. Do this calculation every year, since you choose with your return, and a person without business income must choose the old regime along with the return furnished by the due date.

Frequently asked questions

What can I claim over and above section 80C?

NPS (₹50,000 under 80CCD(1B)), health insurance (80D), education loan interest (80E), donations (80G), rent without HRA (80GG), home loan interest, savings interest (80TTA or 80TTB) and disability related deductions.

What is the limit under section 80D?

₹25,000 for self, spouse and children (₹50,000 if a senior citizen) and the same again for parents, so up to ₹1,00,000 in total when both are senior citizens.

Which of these work in the new tax regime?

Mainly the standard deduction of ₹75,000, the employer’s contribution to NPS, and interest on a let-out house against its rent. Most other deductions need the old regime.

What are the new section numbers?

80D is section 126, 80E is 129, 80G is 133, 80GG is 134, 80TTA and 80TTB are 153, and 80CCD(1B) is 124(3) in the Income-tax Act, 2025.

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.

Types Of Taxes In India: Direct Tax And Indirect Tax

Posted on by CA Meet Dhrangadhariya

Last updated: 28 September 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • Taxes in India are direct (income tax, Securities Transaction Tax) or indirect (GST, customs duty, limited central excise, state VAT on petroleum and alcohol).
  • Direct taxes are borne by the person on whom they are levied; indirect taxes are passed on to the final consumer.
  • Wealth tax, gift tax and fringe benefit tax no longer exist, and GST replaced service tax, sales tax, state VAT on most goods and octroi.
  • The note compares both kinds with advantages, disadvantages and a difference table.

Taxes in India are broadly classified into direct taxes, such as income tax, and indirect taxes, such as GST and customs duty. Direct taxes are paid by the person on whom they are levied. Indirect taxes are included in the price of goods and services, and the burden passes to the final consumer. Knowing the types of taxes helps taxpayers comply with the law and plan their finances.

Types Of Taxes In India

Direct taxes are administered by the Central Board of Direct Taxes (CBDT). Indirect taxes (GST, customs and central excise) are administered by the Central Board of Indirect Taxes and Customs (CBIC).

Direct Taxes

A direct tax is levied on the income or profits of a person, who has to bear it and cannot pass it on to someone else. The main direct taxes in force are:

  • Income tax: charged on the income of individuals, HUFs, firms, companies and other persons. Capital gains tax is part of income tax. Surcharge and the 4% health and education cess are added on top of income tax.
  • Securities Transaction Tax (STT): charged on specified transactions in listed securities. It is a direct tax collected at the time of the transaction.

Several direct taxes that older books still list no longer exist: wealth tax (abolished from AY 2016-17), gift tax (abolished in 1998; gifts above the prescribed limit are now taxed as income) and fringe benefit tax (abolished from AY 2010-11).

Indirect Taxes

An indirect tax is charged on goods and services. It is collected by the seller and the burden is passed on to the end consumer. The main indirect taxes in force are:

  • Goods and Services Tax (GST): a single tax on the supply of goods and services, in force since 1 July 2017. It replaced service tax, central excise on most goods, state VAT on most goods, central sales tax, octroi and entry tax, and removed the cascading effect.
  • Customs duty: charged on goods imported into India.
  • Central excise duty: now limited to a small set of goods, mainly petroleum products.
  • State VAT: still levied by states on petrol, diesel and alcohol for human consumption.

Other levies

Some levies are neither central direct nor indirect taxes: property tax (local municipal), stamp duty and registration fees (state), and professional tax (state, capped at Rs 2,500 a year under the Constitution). A toll is a fee for using a road, not a tax.

Direct taxes Indirect taxes Other levies
Income tax (including capital gains) GST Property tax
Securities Transaction Tax Customs duty Stamp duty and registration fees
Central excise (limited goods) Professional tax
State VAT (petroleum, alcohol) Toll (a fee)

Advantages And Disadvantages Of Direct Tax

Advantages Disadvantages
Progressive in nature: people with lower incomes pay less tax than people with higher incomes. Some taxpayers evade or avoid tax.
Helps reduce income inequality. Compliance and documentation can be complex and time-consuming.
Certainty: the government and the taxpayer both know what is to be paid and when. The burden cannot be transferred to anyone else.

Advantages And Disadvantages Of Indirect Tax

Advantages Disadvantages
Everyone who spends contributes to nation-building. Raises the overall price of goods and services.
Easy to collect from the end consumer. Consumers often do not know how much tax they pay.
Lower rates can be applied to essential goods and higher rates to luxury goods. Regressive in nature, as it takes a larger share of low incomes.
The burden can be passed to the end consumer. Revenue is hard to predict because it depends on what people buy.

Difference Between Direct Tax And Indirect Tax

Basis Direct Tax Indirect Tax
Definition Tax levied directly on the income or profits of a person. Tax levied on the supply of goods and services.
Burden of Tax Cannot be shifted; borne by the person on whom it is imposed. Can be shifted; ultimately borne by the end consumer.
Governing Body Central Board of Direct Taxes (CBDT). Central Board of Indirect Taxes and Customs (CBIC).
Examples Income tax, Securities Transaction Tax. GST, customs duty, central excise.
Impact on Prices Does not directly affect the price of goods and services. Forms part of the price of goods and services.
Payment Paid directly to the government by the taxpayer. Collected by the seller or service provider and paid to the government.

Now that you know the main types of taxes in India, it is easier to see which ones apply to you.

Frequently asked questions

What are the two main types of taxes in India?

Direct taxes, such as income tax, which are paid by the person on whom they are levied, and indirect taxes, such as GST and customs duty, which are passed on to the final consumer.

Is wealth tax still charged in India?

No. Wealth tax was abolished with effect from AY 2016-17. Gift tax was abolished in 1998 and gifts above the prescribed limit are now taxed as income.

Which taxes did GST replace?

GST replaced service tax, central excise on most goods, state VAT on most goods, central sales tax, octroi and entry tax.

Who administers direct and indirect taxes?

Direct taxes are administered by the Central Board of Direct Taxes (CBDT) and indirect taxes such as GST, customs and central excise by the Central Board of Indirect Taxes and Customs (CBIC).

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.

Landlord’s PAN for HRA Exemption: When It Is Mandatory

Posted on by CA Meet Dhrangadhariya

Last updated: 06 September 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • You must give your landlord’s PAN to your employer if the rent you pay in the year is more than ₹1,00,000 (about ₹8,333 a month).
  • If the landlord has no PAN, a declaration from the landlord with name and address is accepted.
  • Form 124 (earlier Form 12BB) asks for the landlord’s name, address, PAN, Aadhaar, relationship and rent paid; Aadhaar is not mandatory unless your employer asks.
  • The HRA exemption is only for the old tax regime. Rent paid to a spouse is not accepted, and rent to parents needs them to report the income.

If you claim the HRA exemption and pay a high rent, you must give your employer the landlord’s PAN. The rule is meant to make sure the rent is real and that the landlord reports it as income.

The rule

  • If the rent you pay in the year is more than ₹1,00,000 (about ₹8,333 a month), the landlord’s PAN must be given. The Income Tax Department’s FAQ on Form 124 says the PAN must be furnished if the annual rent exceeds ₹1,00,000.
  • If the rent is ₹1,00,000 or less, the PAN is not required, but you still give the landlord’s name and address.
  • Aadhaar is not mandatory unless your employer specifically asks for it.

If the landlord has no PAN

Get a declaration from the landlord that they do not have a PAN, stating their name and address, as allowed by CBDT Circular 8/2013 dated 10/10/2013. Give it to your employer with your other documents. The declaration should be from the landlord, not from you.

Where do you give it?

In Form 124, the statement to your employer. Up to FY 2025-26 this was Form 12BB. For HRA it asks for:

  1. Name of the landlord.
  2. Address.
  3. PAN.
  4. Aadhaar number.
  5. Relationship with the landlord, if any.
  6. Rent paid to the landlord.

A copy of the rent agreement is the supporting document. Form 124 is given to your employer. It is not uploaded on the income tax portal.

Other conditions for the HRA exemption

  • You must be getting HRA from your employer and be in the old tax regime.
  • You must actually pay rent for a house that you do not own.
  • Rent paid to your spouse is not accepted. If you pay rent to your parents, they must own the house and show the rent as income in their return.
  • The exemption is the lowest of the HRA received, 50% (eight metro cities) or 40% of salary, and rent paid less 10% of salary.

Documents to keep

  • Rent agreement.
  • Rent receipts or, better, bank proof of payment each month.
  • Landlord’s PAN or the landlord’s no-PAN declaration.
  • Salary slips showing HRA.

If you do not give the proof

  • Your employer can refuse the exemption and deduct higher TDS.
  • You can still claim the exemption in your return if you have the proof, and get a refund of the excess TDS.
  • A claim without proof may be questioned by the department.

TDS on rent is a separate matter

The tenant’s own duty to deduct tax at source on rent is different from the HRA rule. Under the Income-tax Act, 2025 (section 393, Table Sl. No. 2), a tenant who is not a specified person, such as an individual or HUF who is not liable to a tax audit, deducts tax at 2% on rent where it is ₹50,000 or more for a month or part of a month. A specified person (an audited individual or HUF, or other person) deducts 2% for machinery, plant or equipment and 10% for land, building or furniture, on the same threshold. The 1961 Act equivalents are sections 194-IB and 194-I. Check your own status with a professional.

Frequently asked questions

When is landlord PAN required for HRA?

When the rent you pay in the year is more than ₹1,00,000, that is above about ₹8,333 a month.

What if the landlord does not have a PAN?

Give your employer a declaration from the landlord that they do not have a PAN, along with their name and address.

Is Aadhaar required?

Form 124 asks for the landlord’s Aadhaar, but it is not mandatory unless your employer specifically asks for it.

Can I claim HRA without giving rent proof?

Your employer may refuse the exemption and deduct more TDS. You can still claim it in your return if you have the proof.

Is the HRA exemption 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.

Can You Claim Both HRA and Home Loan Interest Deduction?

Posted on by CA Meet Dhrangadhariya

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

Quick summary

  • Yes, you can claim the HRA exemption and home loan interest together if you pay rent for a house you do not own and also have a home loan on another house.
  • The HRA rule needs that the house you live in is not owned by you and that you actually pay rent for it. It does not stop you owning a different house.
  • Interest on a self-occupied house is limited to ₹2 lakh; interest on a let-out house has no such cap on the interest itself.
  • Both claims need genuine proof and, for HRA, the old tax regime. In the new regime, HRA and self-occupied house interest are not allowed.

Many people think they must choose between HRA and a home loan. They do not. The two work on different houses and different heads of income, so they can be claimed together if you meet the conditions of each. Both are claimed in the old tax regime.

The HRA conditions

The HRA exemption is in section 10(13A) of the Income-tax Act, 1961 up to FY 2025-26, and in Schedule III (Table Sl. No. 11) of the Income-tax Act, 2025 from Tax Year 2026-27. It needs:

  • an HRA granted to you by your employer for rent,
  • the house you occupy is not owned by you, and
  • you actually pay rent for that house.

The exemption is the lowest of the HRA received, 50% (eight metro cities) or 40% of salary, and rent paid less 10% of salary (Rule 279 of the Income-tax Rules, 2026).

Nothing in these conditions stops you owning another house elsewhere.

The home loan conditions

Interest on a loan taken to buy or build a house is a deduction from house property income: section 24(b) of the 1961 Act, section 22(1)(b) of the 2025 Act.

  • For a self-occupied house the interest is limited to ₹2 lakh a year, if the house is bought or built within five years from the end of the year in which the loan was taken. Otherwise the limit is ₹30,000.
  • Interest paid before the house is completed is claimed in five equal parts from the year of completion.
  • For a let-out house the interest is deducted in full, but the loss from house property that you can set off against other income is limited to ₹2 lakh a year.
  • Principal repaid is a separate section 80C (section 123) deduction.

Four common situations

Situation HRA and interest together? Note
Own a house in another city and rent a house where you work Yes The usual case.
Own a house in the same city but rent another for a genuine reason, such as distance to work or a school Yes, if genuine Keep full proof of both.
Bought an under-construction flat and live on rent Yes Pre-completion interest is claimed in five equal parts after completion.
Rent out your own loan-financed house and live in a rented house elsewhere Yes The rent you receive is taxed as house property income, and the interest is deducted against it.

A house kept vacant, or used by your family, is generally treated as self-occupied for the interest limit.

Example

Aryan works in Gurgaon, pays rent of ₹10,000 a month and gets an HRA of ₹15,000 a month. His basic salary is ₹40,000 a month. He has a home loan for a house in Bengaluru where his parents live, with interest of ₹20,000 a month.

HRA exemption (monthly): the lowest of ₹15,000 (HRA received), ₹16,000 (40% of basic, as Gurgaon is not one of the eight metro cities) and ₹6,000 (rent ₹10,000 less ₹4,000, which is 10% of basic). So ₹6,000 a month, ₹72,000 a year, is exempt and ₹9,000 a month is taxable.

Interest: ₹2,40,000 a year, but for a self-occupied house the deduction is limited to ₹2,00,000.

New tax regime

In the new regime neither HRA nor interest on a self-occupied house is allowed. Interest on a let-out house is still allowed against the rent received.

Proof you need

  • Rent agreement, rent receipts or bank proof, and the landlord’s PAN if rent is above ₹1,00,000 a year.
  • The lender’s interest certificate, the loan agreement and the possession or completion papers.
  • The declaration to your employer in Form 124 (earlier Form 12BB).

Frequently asked questions

Can I claim HRA and home loan interest together?

Yes, if you live in a rented house that you do not own, pay rent, and have a home loan on a different house, in the old tax regime.

Can I claim both if the loan house is in the same city?

The law does not bar it, but the claim must be genuine, for example because the house is let out, too far from work or under construction. Keep full proof.

What is the limit on home loan interest?

₹2 lakh a year for a self-occupied house, if construction or purchase is completed within five years of the year the loan was taken. Otherwise ₹30,000.

Is this available in the new tax regime?

No. HRA and the interest on a self-occupied house are not allowed in the new regime. Interest on a let-out house is allowed.

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.

Telephone and Internet Allowance: Is It Taxable?

Posted on by CA Meet Dhrangadhariya

Last updated: 28 September 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • When the employer reimburses or pays your telephone and mobile phone expenses, the payment is not taxed as a perquisite.
  • A fixed telephone or internet allowance paid in your salary, without bills, is part of salary and is taxable.
  • There is no separate rupee limit for the reimbursement in the rule, but it should be for official use and reasonable for your role.
  • The perquisite rule is the same in the old and new tax regimes.

With work from home and hybrid working, many employers pay for telephone and internet. Whether the payment is taxable depends on how it is paid: as a fixed allowance in your salary, or as a reimbursement of the bills you submit.

Reimbursement of bills

When the employer pays or reimburses the actual cost of your telephone or mobile phone bills, the benefit is not taxed as a perquisite. The perquisite valuation rules (rule 3 of the Income-tax Rules, 1962, and the corresponding rule in the Income-tax Rules, 2026) value “any other benefit or amenity” provided by the employer but exclude expenses on telephones, including a mobile phone.

  • Keep the bills in your own name, or as your employer asks.
  • The use should be for official work.
  • There is no limit in the rule on the reimbursement amount, but your employer will usually fix a reasonable cap by your role.

Fixed allowance

If the employer pays a fixed amount every month, for example ₹1,500 as “telephone and internet allowance”, with no bills, it is part of your salary and is taxed at your slab rate. The exemption for reimbursement is not available.

What about internet and broadband?

The rule is worded around telephones, including mobile phones. Employers commonly extend the same treatment to broadband and mobile data used for work. If you get a reimbursement for broadband, follow your employer’s policy and keep the bills and the employer’s certificate that it was for official use.

Old or new regime?

The same treatment applies in both regimes, because it is a perquisite valuation rule and not an exemption that the new regime withdraws.

Example

Ms K gets ₹1,200 a month fixed as “mobile and internet allowance”. It is taxable salary of ₹14,400 a year. Her colleague submits his actual mobile bills of ₹1,200 a month to the company, which reimburses them. The reimbursement is not taxed.

Tips

  • Prefer a reimbursement structure if your employer offers it, as it is the more tax-efficient route.
  • Do not claim a reimbursement for personal use or for bills you did not pay.
  • Keep copies of bills, as the employer or the department may ask for them.

Frequently asked questions

Is a telephone allowance taxable?

A fixed telephone allowance paid with your salary is taxable. A reimbursement of your actual phone bills by the employer is not taxed as a perquisite.

Is there a limit on tax-free reimbursement?

The rules do not set a rupee limit. It should be for official use and reasonable for your job.

Is internet or broadband covered?

The rules refer to expenses on telephones, including a mobile phone. Many employers treat broadband used for work in the same way, so check how your employer treats it and keep the bills.

Does it depend on the tax regime?

No. Perquisite valuation applies to both the old and the new regime.

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.

Uniform Allowance: Tax Exemption, Limit and Rules

Posted on by CA Meet Dhrangadhariya

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

Quick summary

  • Uniform allowance is exempt up to the amount you actually spend on buying or maintaining uniforms for official duties.
  • The unspent part is taxable as salary.
  • It is available only in the old tax regime; the new regime does not exempt it.
  • From Tax Year 2026-27 it is in Schedule III of the Income-tax Act, 2025 and Rule 280(1)(g) of the Income-tax Rules, 2026.

A uniform allowance is paid by an employer to meet the cost of uniforms that employees must wear while working, as in the police, defence, hospitals, airlines and banks. The allowance is part of salary, but the part you spend on the uniform is exempt from tax if you are in the old tax regime.

Where is this in the law?

Up to FY 2025-26 it was section 10(14)(i) of the Income-tax Act, 1961 and Rule 2BB(1)(g). From Tax Year 2026-27 it is in Schedule III (Table Sl. No. 12) of the Income-tax Act, 2025, with Rule 280(1)(g) of the Income-tax Rules, 2026, which covers an allowance granted to meet the expenditure incurred on the purchase or maintenance of uniform worn during the performance of duties of an office or employment of profit.

How much is exempt?

The lower of:

  • the uniform allowance you receive, and
  • the amount you actually spend on the uniform.

Any unspent part is taxable as salary.

What counts as uniform expenditure?

  • Buying uniforms.
  • Tailoring or alteration.
  • Laundry and maintenance.
  • Accessories that are part of the uniform.

Example

Mr P gets a uniform allowance of ₹24,000 a year but spends only ₹18,000 on uniforms and laundry. In the old regime ₹18,000 is exempt and ₹6,000 is taxable. In the new regime the whole ₹24,000 is taxable.

Old regime or new regime?

Under section 202 of the Income-tax Act, 2025 the new regime does not exempt this allowance. Rule 280(3) keeps in the new regime only the allowances for travel on tour or transfer, daily charges, conveyance in duties, and the disabled employee’s transport allowance. Uniform allowance is not on that list, so you need the old regime.

How to claim

Give your employer proof of expense or the declaration the employer asks for, so the exemption is allowed in Form 16. If it was not, you can claim it in the salary schedule when you file your return, but keep the bills in case of a query.

Frequently asked questions

How much of uniform allowance is exempt?

The amount you actually spend on the purchase or maintenance of uniform for official duties, up to the allowance you receive. The balance is taxable.

Is uniform allowance exempt in the new tax regime?

No. It is exempt only in the old regime.

What expenses are covered?

Buying uniforms, tailoring and alteration, laundry and upkeep, and accessories that are part of the uniform.

Do I need bills?

Keep bills or a declaration as your employer asks. The exemption is based on actual expense.

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.

Children Education Allowance, Hostel Allowance and Tuition Fee Tax Benefits

Posted on by CA Meet Dhrangadhariya

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

Quick summary

  • From 01/04/2026 children education allowance is exempt up to ₹3,000 a month per child and hostel allowance up to ₹9,000 a month per child, for up to two children, in the old tax regime only.
  • Up to FY 2025-26 the limits were only ₹100 and ₹300 a month per child.
  • Separately, tuition fees for up to two children can be claimed under section 80C (section 123 of the Income-tax Act, 2025), within the ₹1.5 lakh limit, in the old regime.
  • Neither benefit is available in the new tax regime.

Salaried parents can get two separate tax benefits for their children’s education: an exemption on the children education allowance and hostel allowance their employer pays, and a deduction for tuition fees under section 80C. Both need the old tax regime.

Children education and hostel allowance

Up to FY 2025-26 these were exempt under section 10(14)(ii) of the Income-tax Act, 1961 and Rule 2BB. From Tax Year 2026-27 they are in Schedule III (Table Sl. No. 13) of the Income-tax Act, 2025, with the amounts in Rule 280(2) of the Income-tax Rules, 2026.

Allowance Up to FY 2025-26 From 01/04/2026
Children education allowance, per child per month ₹100 ₹3,000
Hostel expenditure allowance, per child per month ₹300 ₹9,000
Number of children Two Two

So for two children, the annual exemption from 01/04/2026 is up to ₹72,000 for education allowance and up to ₹2,16,000 for hostel allowance. Both apply across India and need the allowance to be actually paid by the employer. The exemption is not more than the allowance received.

The new limits apply only to the old tax regime. Under section 202 of the Income-tax Act, 2025 and Rule 280(3), the new regime does not allow these exemptions.

Tuition fees under section 80C

  • Tuition fees paid to a university, college, school or other educational institution in India for the full-time education of up to two children qualify under section 80C, within the overall ₹1.5 lakh limit. From Tax Year 2026-27 this is section 123 of the Income-tax Act, 2025.
  • Development fees, donations, transport, uniform, stationery and similar charges do not qualify.
  • Part-time courses and fees paid for yourself, your spouse or other relatives do not qualify. Fees paid to an institution outside India do not qualify.
  • The fee must have been paid in the year.

Example

Ms R has two children, one in a day school and one in a hostel. Her employer pays children education allowance of ₹3,000 a month for each child, and a hostel allowance of ₹9,000 a month for one child. In FY 2026-27 she can exempt ₹72,000 education allowance and ₹1,08,000 hostel allowance in the old regime. If she also pays ₹40,000 as tuition fees, she can claim that under section 123 along with her other 80C investments.

How to claim

  • Give your employer the fee receipts and the declaration in Form 124 (earlier Form 12BB) so the exemption and deduction are allowed while calculating TDS.
  • If you could not, claim them when you file your return. Salaried parents claim the allowance in the salary schedule and the tuition fees in the deductions schedule.
  • Non-salaried parents can claim only the tuition fee deduction.

Frequently asked questions

What is the children education allowance exemption now?

From 01/04/2026, ₹3,000 a month per child, up to two children, in the old tax regime. Up to FY 2025-26 it was ₹100 a month per child.

What is the hostel allowance exemption?

From 01/04/2026, ₹9,000 a month per child, up to two children. Up to FY 2025-26 it was ₹300 a month per child.

Can I claim both the allowance and tuition fees under 80C?

Yes. They are separate benefits: the allowance is an exemption on salary, and the tuition fees are a section 80C deduction.

Does 80C cover school development fees or donations?

No. Only tuition fees for full time education in India, for up to two children.

Are these available in the new tax regime?

No. Both the allowances and the 80C deduction need the old 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.