Income Tax · Topic
Salaried Income & HRA
House Rent Allowance, salary heads, perquisites, and the metro/non-metro classification for Rule 2A.
Articles in this topic 14
- 01
SAL-01: The Restricted Stock Unit and Employee Stock Option Double-Tax Trap
When an Indian Resident receives Restricted Stock Units or Employee Stock Options of the foreign parent of his or her employer -- typically a United States listed company, a Singapore listed holding, a Cayman Islands incorporated entity -- the share is a security in a n…
- 02
SAL-02: Estate Tax Risk on United States Listed Stocks -- The 40% Federal Estate Tax for Indian Holders
An Indian Resident Salaried executive who has accumulated United States listed shares through five or six years of Restricted Stock Unit vesting in a multinational employer -- holding $200,000, $500,000, or even $1 million of underlying United States equity -- faces a t…
- 03
SAL-03: Deferred Employee Stock Options in Eligible Startups -- The Five-Year Tax Deferral under Section 80-IAC
When the founder-CEO of a Series-A funded Bengaluru SaaS startup grants Employee Stock Options to a senior engineering leader, the standard rule under sub-clause (vi) of clause (2) of section 17 of the Income-tax Act, 1961 would tax the exercise-day Fair Market Value as…
- 04
SAL-04: Shadow Income -- Joining Bonuses, Notice Period Buyouts, and Retention Incentives
Three categories of compensation routinely catch the salaried executive off guard at filing time -- the joining bonus that has to be returned if the employee leaves before the end of the lock-in period; the notice period buyout that the new employer reimburses to free t…
- 05
Cities Eligible for 50 percent House Rent Allowance Exemption
The House Rent Allowance exemption under section 10(13A) of the Income-tax Act, 1961 -- one of the most-used carve-outs in Indian salary tax -- has historically distinguished four 'metros' (Delhi, Mumbai, Kolkata, Chennai) at 50% of basic salary, with everywhere else at…
- 06
SAL-05: Rent-Free Accommodation versus House Rent Allowance -- Mathematical Modelling for Tax Year 2026-27
When a senior employee negotiates the housing component of a compensation package, two structures dominate -- the cash House Rent Allowance under section 10(13A) read with Rule 2A of the Income-tax Rules, 1962, and the in-kind Rent-Free Accommodation under sub-clause (i…
- 07
SAL-06: Car Lease and Chauffeur Perquisite -- The 1.6 Litre Engine Threshold and the New 2026 Monthly Taxable Values
Few perquisites are as commonly misunderstood as the company car. The senior executive who drives a ₹40 lakh sedan provided by the employer routinely assumes the entire monthly cost -- ₹65,000 of lease rental plus ₹35,000 of fuel and maintenance plus ₹25,000 of chauffeu…
- 08
SAL-07: Concessional Loans from Employers -- The State Bank of India Benchmarking Method
When an employer extends a personal loan, a housing loan, a vehicle loan or an education loan to an employee at zero interest or at a rate below the market rate, sub-rule (7) of Rule 3 of the Income-tax Rules, 1962 read with sub-clause (iii) of clause (2) of section 17 …
- 09
SAL-08: Sweat Equity for Senior Management -- Valuation Nuances for Directors and Regular Employees
Sweat equity shares are equity shares issued by a company to its directors or employees at a discount, or for consideration other than cash, in recognition of know-how, intellectual property, or value-additions made to the company. The Companies Act, 2013 (sections 53 a…
- 10
SAL-09: The Form 130 and Form 168 Transition -- Why Your Form 16 is Now Form 130 and Your Form 26AS is Now Form 168
The Income-tax Act, 2025, applicable from Tax Year 2026-27 onwards, brings with it a comprehensive renumbering of forms, schedules, and procedural references in the Income-tax Rules, 1962. The salaried taxpayer most directly encounters two of these renumberings -- Form …
- 11
SAL-10: Landlord Relationship Disclosure -- The 2026 Requirement to Report Your 'Relationship with Landlord' to the Employer
From the 2026 employer payroll cycle onwards, the Form 12BB declaration that every salaried employee must file with the employer to claim House Rent Allowance exemption under section 10(13A) has been enhanced. In addition to the rent amount and the landlord's name and P…
- 12
SAL-11: Medical Treatment Abroad -- The Rs 8 Lakh Gross Total Income Threshold for Tax-Free Foreign Medical Travel
Long-standing Indian tax law has provided that where an employer pays for the medical treatment of an employee, employee's spouse, employee's dependent children, or other dependent specified relatives, the entire cost -- including the cost of foreign treatment, foreign …
- 13
SAL-12: Leave Travel Concession Redefined -- The Block Year 2026 to 2029 under the Income-tax Act, 2025
Leave Travel Concession is the cash benefit an employer pays its employee for travel undertaken with family during leave. Sub-clause (5) of clause (5) of section 10 of the Income-tax Act, 1961 read with Rule 2B of the Income-tax Rules, 1962 exempts up to two journeys' L…
- 14
SAL-13: The Rs 12.75 Lakh Zero-Tax Sweet Spot -- Strategy for Salaried Assessees under the New Regime
The Finance Act, 2025 made the most consequential change to Indian individual taxation in over a decade -- raising the section 87A rebate under the new regime to rupees sixty thousand and the income threshold to rupees twelve lakh, with a marginal relief mechanism for i…