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How to read section numbers: s.80C→s.123 means Section 80C of the Income-tax Act, 1961 is now Section 123 of the Income-tax Act, 2025 (in force from 1 April 2026). Returns for FY 2025-26 still use the old numbers; Tax Year 2026-27 onwards uses the new ones. Section Finder
How the deduction works
- At the start of the year you tell the employer your regime; without intimation, the new regime applies
- In the old regime, declare investments and rent in Form 12BB (new Form 124) with proofs
- Income from a previous employer in the same year, and other TDS/TCS, can be reported to the current employer to deduct correctly
- Monthly TDS is deposited by the 7th of the next month and reported in the quarterly salary statement (Form 24Q → Form 138)
Check before filing
Match the salary and TDS in Form 16 / Form 130 with AIS and Form 26AS (Form 168). Mismatches are the biggest cause of 143(1) adjustments for salaried people.
Worked example
Example
Example: Estimated salary ₹14 lakh, new regime: taxable ₹13.25 lakh, tax ₹81,900 with cess → monthly TDS about ₹6,825.
Common mistakes
- Not submitting rent receipts in time and losing HRA in TDS (you can still claim it in the ITR under the old regime)
- Two employers in a year each giving the ₹75,000 standard deduction
Frequently asked questions
Yes. If you have no business income, the choice in the ITR prevails over what you told the employer.
Last reviewed on 11 November 2026 by Vinay Jaglan, VJ & Associates. Law and portal screens change — verify before acting, or ask the office.
