HRA Exemption — Least of 3, Old Regime Only

Only four cities are treated as metro under Section 10(13A): Delhi, Mumbai (including Thane and Navi Mumbai), Chennai and Kolkata, where 50% of basic+DA is used. Every other city — including Bengaluru, Hyderabad, Pune and Ahmedabad — is non-metro, where 40% applies. Bengaluru and Hyderabad are non-metro for HRA despite being major IT hubs.

No. HRA exemption under Section 10(13A) is available only in the old tax regime. If you opt for the default new regime, the entire HRA received is taxable as salary. The new regime gives lower slab rates and a Rs 75,000 standard deduction but disallows HRA, LTA, 80C, 80D and most other exemptions. If your rent and deductions are high, the old regime may still save more — compare both.

No. HRA exemption requires you to actually pay rent for the accommodation you occupy. If you live in your own self-occupied house, you cannot claim HRA even if your salary has an HRA component — the whole HRA is taxable. However, if you rent in one city while owning a house in another, you can claim HRA on the rented home and also claim home-loan interest under Section 24(b) on the owned property.

Rent receipts are needed when monthly rent is above Rs 3,000. If your annual rent exceeds Rs 1,00,000, you must also give your landlord's PAN to your employer. You do not attach receipts to the ITR, but keep them and the payment proof in case of scrutiny — especially where rent is paid to a family member, where genuine bank transfers matter.

If you pay rent but receive no HRA — or you are self-employed — you can claim a deduction under Section 80GG instead. It is the least of Rs 5,000 per month, 25% of total income, or rent paid minus 10% of total income. Like HRA, Section 80GG is available only under the old tax regime and needs Form 10BA.

Yes, in genuine cases. If you rent a house in your work city and own a house (with a loan) in another city, you can claim HRA on the rent and home-loan interest under Section 24(b) plus principal under 80C on the owned house. Both are old-regime benefits. The tax office may question claiming both for the same city without a valid reason.

LTA is exempt under Section 10(5) for the actual cost of domestic travel (air, rail or bus fare) for you and your family, for up to two journeys in a block of four calendar years. Only travel fare is covered — not hotels, food or local transport. LTA exemption is available only under the old tax regime and requires travel proof.

For non-government employees covered by the Payment of Gratuity Act, gratuity is exempt under Section 10(10) up to Rs 20,00,000 (lifetime limit), or the amount actually received or 15 days' salary per year of service, whichever is least. Government employees get full exemption. Amounts above the limit are taxable as salary. This exemption applies under both the old and new regimes.

Leave encashment at retirement is exempt for non-government employees under Section 10(10AA) up to Rs 25,00,000 (raised from Rs 3 lakh in 2023), subject to the statutory formula. Government employees get full exemption. Leave encashment while still in service is fully taxable. The exemption is available in both tax regimes.

Perquisites are valued under Rule 3 and added to salary. Rent-free or concessional accommodation and company cars have prescribed valuation rules. ESOPs are taxed as a perquisite at the time of exercise, on the fair market value of the shares minus the exercise price; eligible startups get a deferral of the TDS. Perquisites are taxable regardless of the regime chosen.

From FY 2021-22, interest on your own EPF contribution above Rs 2,50,000 in a year is taxable under the proviso to Section 10(12). The threshold is Rs 5,00,000 if the employer makes no contribution to the fund. EPFO maintains a separate taxable-contribution account and deducts TDS on the taxable interest. VPF contributions count towards the same Rs 2.5 lakh limit.

EPF withdrawal is tax-free if you have completed five years of continuous service (across employers, if the PF was transferred). Withdrawal before five years is taxable, and EPFO deducts TDS under Section 192A at 10% (20% if you have not given your PAN). Transferring your PF on a job change is not a withdrawal and is not taxable.

The employer's contribution to EPF, NPS and a superannuation fund taken together is tax-free up to Rs 7,50,000 a year. Any employer contribution above Rs 7.5 lakh is taxable as a perquisite in your hands, along with the notional interest attributable to the excess. The employee's own 12% contribution qualifies for 80C in the old regime.

Bank and fixed-deposit interest is fully taxable at your slab rate. Banks deduct TDS under Section 194A once interest crosses Rs 50,000 in a year (Rs 1,00,000 for senior citizens, per Budget 2025). Savings-account interest is deductible up to Rs 10,000 under Section 80TTA, or up to Rs 50,000 for senior citizens under Section 80TTB — both old regime only.

Yes. Since FY 2020-21, dividends are taxable in the investor's hands at slab rates; the earlier tax-free treatment ended with the abolition of the dividend distribution tax. Companies deduct TDS under Section 194 at 10% where the dividend to a resident exceeds Rs 10,000 in a year. Report dividends under Income from Other Sources.

A bonus from your employer is fully taxable as salary in the year it is received. Gifts of money or property from a non-relative are taxable under Section 56(2)(x) if the total exceeds Rs 50,000 in a year (then the whole amount is taxable). Gifts from specified relatives, on marriage, or by will are exempt.