Quick Summary
The Income Tax Department has released a detailed reference on the benefits available to salaried employees forTax Year (TY) 2026-27, covering allowances, perquisites, deductions, retirement benefits and other salary-related exemptions. The document incorporates provisions of the Income-tax Act, 2025, as amended by the Finance Act, 2026. For salaried taxpayers, understanding these provisions can help in determining the taxable portion of salary and identifying benefits that may be fully or part
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FAQ :
For the normal tax regime, the standard deduction is Rs 50,000 or salary, whichever is lower. For the new tax regime under Section 202, it is Rs 75,000 or salary, whichever is lower. Professional tax paid is also deductible.
HRA exemption is the least of: actual HRA received; 40% of salary (or 50% in specified metro cities); or rent paid minus 10% of salary. Salary typically includes basic salary, dearness allowance, and commission.
Children Education Allowance is exempt up to Rs 3,000 per month per child for a maximum of two children. Hostel Expenditure Allowance is exempt up to Rs 9,000 per month per child for a maximum of two children.
Yes, employees in specified difficult or remote locations may receive special compensatory allowances. These can range from Tough Location Allowance (Rs 1,500 to Rs 7,000 per month) to Compensatory Field Area Allowance (Rs 13,500 per month) and others, subject to conditions.
Employer contributions to recognised provident funds, NPS, and approved superannuation funds become taxable if the aggregate contribution exceeds Rs 7.50 lakh in a tax year.
Interest credited to recognised provident funds is generally exempt, but taxable if employee contributions exceed Rs 2.50 lakh in a tax year. If there's no employer contribution, this threshold for employee contributions is Rs 5 lakh.
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