Tag: Section 123

Missed the Proof Submission Deadline? How to Claim HRA and Deductions in Your Return (2026-27)

Posted on by CA Meet Dhrangadhariya

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

Quick summary

  • Your employer asks for evidence of HRA, LTA, home loan interest and Chapter VIII deductions in Form 124 (Rule 205) so that it deducts the right TDS; there is no legal cut-off date, only the employer’s payroll cut-off.
  • If you miss it, TDS is deducted without those claims, but you can still claim HRA exemption and section 123 deductions in your income-tax return and get the excess back as a refund.
  • Both HRA and section 123 deductions are available only in the old regime; the new regime allows neither.
  • Do not send the proofs with the return; keep them ready in case of a notice.

Every year, employers ask for rent receipts, investment proofs and loan certificates in the last months of the tax year. If you miss the date, your payslip shows more TDS than you expected. That money is not lost. Most claims can be made again, and the excess tax recovered, when you file your return.

Why the employer asks for proofs

Under section 392 of the Income-tax Act, 2025 the employer must deduct tax on salary at the average rate on your estimated income. To estimate your income, it gets evidence of your claims under section 392(5)(b), in Form 124 (Rule 205). The Rule lists what is needed:

Claim Evidence the employer asks for
House rent allowance Landlord’s name, address and PAN where yearly rent is above ₹1,00,000, and any relationship with the landlord
Leave travel concession or assistance Evidence of the expenditure
Interest on a house loan Lender’s name, address and PAN
Chapter VIII deductions Evidence of investment or expenditure

The date set by the employer is a payroll cut-off, not a date in the law. The employer may also adjust later deductions to correct any excess or deficiency in the year (section 392(5)(c)).

What happens if you miss it

The employer deducts tax as if you had no claims. Your TDS certificate (Form 130, due by 15 June after the year, Rule 215) shows that tax. You have paid more than you owe, but the excess is yours to recover, as a refund, when the return is processed.

What you can still claim in the return

Only in the old regime. Section 202(2) bars the HRA exemption (Schedule III, serial 11) and Chapter VIII deductions (other than a few such as the employer’s NPS contribution) in the new regime. If your claims are large, compare both regimes before you choose one when you file.

1. HRA exemption

You need the rent paid and, if yearly rent is above ₹1,00,000, the landlord’s PAN. The exempt amount is the least of the HRA received, rent paid less 10% of salary, and 50% of salary in Mumbai, Kolkata, Delhi, Chennai, Hyderabad, Pune, Ahmedabad and Bengaluru (40% elsewhere), with “salary” as defined in Rule 279. See our post on HRA. If you pay rent but do not get HRA, a separate Chapter VIII deduction for rent may apply (see our post on section 80GG).

2. Section 123 deductions (formerly 80C), up to ₹1,50,000

Schedule XV lists what qualifies. Several need no new investment, so you can claim them from expenses you already incurred:

  • your provident fund contribution (recognised provident fund) and contribution to an approved superannuation fund;
  • tuition fees for full-time education of any two children at an Indian institution, but not development fees or donations;
  • payments for buying or constructing a residential house, such as loan principal, subject to the conditions in paragraph 3 of Schedule XV;
  • life insurance premium, five-year term deposits with a scheduled bank or the post office, the Senior Citizen Savings Scheme and other listed items.

Investments made up to 31 March of the tax year count, even if you made them after your employer’s cut-off.

3. Interest on a housing loan

Where the property qualifies, the interest is claimed in the return under Income from house property. Keep the lender’s interest certificate.

What to do about leave travel concession

The exemption depends on actual travel and the block rules. Employers collect the evidence through Form 124 and apply it in payroll. Whether a claim can be made later in the return depends on the return form and the proof you hold, so if you missed the employer date, ask a professional before you rely on claiming it in the return.

Practical steps

  1. Collect rent receipts, the lender’s certificate, premium and fee receipts and PF statements.
  2. Read your Form 130 and the AIS and compare the salary and TDS with your own records.
  3. Choose the regime that gives the lower tax with your real claims.
  4. File the return and enter the claims in the relevant schedules. The refund is paid after processing.
  5. Do not upload the proofs. Keep them safe in case a notice asks for them.

Next year

Give your employer the Form 124 particulars early in the year and update them as soon as you pay fees or invest. The tax deducted each month then matches your real liability, and you do not have to wait for a refund.

Frequently asked questions

Is there a legal last date for submitting investment proofs to the employer?

No. The employer asks for evidence under section 392(5)(b) in Form 124 (Rule 205) so that it can estimate your income and deduct the right TDS. The date is set by your employer’s payroll, usually in the last quarter of the year.

What happens if I miss it?

The employer deducts TDS on your salary without those claims, so more tax is deducted than your actual liability. Your TDS certificate (Form 130) shows that higher tax.

Can I still get the benefit?

Yes, for most items. Claim the HRA exemption and section 123 deductions when you file the return. The excess TDS comes back as a refund.

Do the claims work in the new tax regime?

No. The new regime does not allow the HRA exemption or Chapter VIII deductions such as section 123 (section 202(2)). They are available only if you choose the old regime.

Do I attach proofs to the return?

No, but keep them. You may be asked for them if the department sends a notice.

When must the TDS certificate be issued?

Form 130 for salary is to be furnished by 15 June after the end of the tax year (Rule 215).

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.

Home Loan Tax Benefits: Interest, Principal, Stamp Duty and Joint Loans (Tax Year 2026-27)

Posted on by CA Meet Dhrangadhariya

Last updated: 02 August 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • A home loan can give four tax benefits: interest under section 22, principal repayment and stamp duty under section 123 (up to ₹1,50,000 with other qualifying items), and the closed first-time buyer schemes in sections 130 and 131.
  • In the old regime a self-occupied house gets up to ₹2,00,000 of interest and ₹1,50,000 under section 123; in the new regime only interest on a let-out house is allowed.
  • Section 123 benefits are reversed if the house is sold within five years from the end of the tax year of possession.
  • Co-owners who are also co-borrowers can each claim their own limits.

A home loan can reduce your tax in several ways, but each benefit has its own section, limit and regime. The Income-tax Act, 2025 has renumbered them (section 24(b) is now section 22, 80C is now section 123, and 80EE and 80EEA are now sections 130 and 131). This post puts them together.

The four benefits

Benefit Section (2025 Act) Limit Old regime New regime
Interest, self-occupied house 22(1)(b), 22(2) ₹2,00,000 (₹30,000 if conditions are not met) Yes No
Interest, let-out house 22(1)(b) No limit Yes Yes
Principal repayment, stamp duty, registration 123, Schedule XV ₹1,50,000 with other qualifying items Yes No
Extra interest for first-time buyers 130 (loan sanctioned 2016-17), 131 (loan sanctioned 2019-22) ₹50,000 and ₹1,50,000 Only for qualifying old loans No

1. Interest (section 22)

Interest payable on capital borrowed to acquire, construct, repair, renew or reconstruct a house is deducted from its annual value. Our post on the home loan interest deduction explains the ₹2,00,000 and ₹30,000 limits, the five year completion condition, the lender’s certificate and pre-construction interest, which is claimed in five equal instalments.

2. Principal repayment and stamp duty (section 123)

Section 123 allows a deduction, within ₹1,50,000 for all items together, for the amount spent on purchase or construction of a residential house. Schedule XV, paragraphs 1(r) and 3, say this includes:

  • instalments or part payments to a development authority, housing board or other authority selling houses on ownership basis;
  • instalments to a company or co-operative society of which you are a shareholder or member, for a house allotted to you;
  • repayment of a loan from the Central or a State Government, a bank (including a co-operative bank), LIC, the National Housing Bank, a housing finance company, a company or co-operative society engaged in house financing, or your employer if it is a public body or a company, university, local authority or co-operative society; and
  • stamp duty, registration fee and other expenses of transferring the house to you.

It does not include the admission fee, cost of shares and initial deposit paid to become a member of a society or company, the cost of additions, alterations, renovation or repairs after the completion certificate was issued or after the house was occupied or let, or any expenditure that is deductible under section 22 (the interest).

Five year rule. If you transfer the house before five years from the end of the tax year in which you took possession, or you receive back any such sum, the deductions already allowed are added to your income of the year of transfer (Schedule XV, paragraph 4).

Section 123 shares its ₹1,50,000 with provident fund contributions, life insurance premiums, tuition fees and other items, so a salaried person with an employee PF contribution may use up much of it before the home loan principal.

3. First-time buyer schemes (sections 130 and 131)

These are the old sections 80EE and 80EEA. They remain in the Act for loans that met their conditions and are old regime only:

Point Section 130 (earlier 80EE) Section 131 (earlier 80EEA)
Extra interest deduction Up to ₹50,000 a year Up to ₹1,50,000 a year
Loan sanctioned 01/04/2016 to 31/03/2017 01/04/2019 to 31/03/2022
Loan or property limit Loan up to ₹35 lakh; house value up to ₹50 lakh Stamp duty value up to ₹45 lakh
Other conditions You own no house on the date of sanction; loan from a bank or housing finance company Same, and you are not eligible under section 130
Overlap The same interest cannot be claimed under any other provision The same

A loan sanctioned today cannot claim either section.

4. Old and new regime

In the new regime, the interest deduction on a self-occupied house, the section 123 deduction and sections 130 and 131 are not allowed (section 202(2)). Only the interest on a let-out house is, and any loss from house property cannot be set off against other income or carried forward. If a home loan is your main deduction, compare both regimes before you choose (our post on saving tax by salary level gives the break-even).

Joint loans

Co-owners with definite shares are taxed separately on their shares, and the relief for a self-occupied house is available to each of them (section 24). Co-owners who are also co-borrowers and pay their share of the EMI can each claim:

  • interest up to ₹2,00,000 on their share, and
  • section 123 for the principal and stamp duty they paid, within their own ₹1,50,000 limit.

A joint loan where only one person pays does not give the other any benefit. Keep the repayment record in each person’s bank account.

Worked example (old regime)

You buy a flat for self-occupation, with the loan sanctioned in 2026. In the first year you pay ₹2,40,000 of interest, ₹1,20,000 of principal and ₹1,00,000 stamp duty and registration. You have no other section 123 items.

  • Interest: limited to ₹2,00,000, giving a loss from house property of ₹2,00,000, set off against salary.
  • Section 123: principal 1,20,000 + stamp duty 1,00,000 = 2,20,000, limited to ₹1,50,000.
  • Total deductions: ₹3,50,000.
  • At a 30% slab, plus 4% cess, the tax saved is 3,50,000 × 30% × 1.04 = ₹1,09,200.

Documents to keep

  • Lender’s interest and principal certificate for each year.
  • Sale deed and the possession or completion certificate.
  • Stamp duty and registration receipts.
  • Bank statements showing the EMIs paid from your account.
  • For a co-owned property, the share of each owner in the deed.

Frequently asked questions

What are the tax benefits on a home loan?

Interest under section 22 (up to ₹2,00,000 for a self-occupied house, the whole amount for a let-out house), principal repayment and stamp duty and registration charges under section 123 within ₹1,50,000, and for some older loans an extra deduction under section 130 or 131.

Are home loan benefits available in the new tax regime?

Only interest on a let-out house. Interest on a self-occupied house and the section 123, 130 and 131 deductions are old regime items (section 202(2)).

Is stamp duty deductible?

Yes. Stamp duty, registration fee and other transfer expenses are part of the amount spent on purchasing a house that qualifies under section 123, in the year you pay them, within the ₹1,50,000 limit shared with the other items.

What if I sell the house early?

If you transfer the house within five years from the end of the tax year in which you got possession, the section 123 deductions already allowed for it are added back to your income in the year of transfer (Schedule XV, paragraph 4).

Can I still claim the extra ₹50,000 or ₹1,50,000 interest?

Only if the loan was sanctioned in the window the section requires: 01/04/2016 to 31/03/2017 for section 130 (₹50,000) and 01/04/2019 to 31/03/2022 for section 131 (₹1,50,000), with the other conditions. A loan taken now does not qualify.

Can both spouses claim on a joint loan?

Yes, if each is a co-owner and a co-borrower and pays his or her share of the instalments. Each can claim the interest and section 123 limits for the share he or she owns and pays.

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.