5 Changes Most Salaried Staff Miss Before Payroll Cut-Off :Is Your Payroll Still Using 40% HRA? 8 Cities Now Get 50% - Form 124

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Form 124 replaces Form 12BB for Tax Year 2026-27: HRA 50% in 8 cities, landlord PAN and investment proof checklist

 

⚡ Quick answer: Form 124 (old Form 12BB) for Tax Year 2026-27
  • Form 12BB is now Form 124 (Rule 205, Income-tax Rules 2026, under section 392 of the Income-tax Act 2025).
  • You give it to your employer, not the tax portal, so HRA, LTA, home-loan interest and investments reduce your salary TDS.
  • New: landlord PAN if rent is over ₹1 lakh a year plus your relationship with the landlord.
  • HRA at 50% of salary now covers 8 cities: Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune, Ahmedabad (old regime).
  • No fixed legal date: your employer's proof cut-off (often Dec–Feb) is your real deadline.

👀 Eye-opener: miss the cut-off, pay now, wait for refund

  • If you don't submit Form 124, your employer must deduct TDS without your deductions. The extra tax is usually recovered from your January–March salaries.
  • You can still claim in your ITR, but your money stays locked until the refund comes.
  • Hidden risk: paying rent to a parent or spouse? The form now asks for the relationship. Pay by bank, keep a rent agreement, and make sure the landlord shows the rent as income.
  • Big change people miss: children education allowance is now ₹3,000 a month per child (was ₹100). For two kids that is up to ₹72,000 a year exempt in the old regime.
💰 Saver tip: if you live in Bengaluru, Hyderabad, Pune or Ahmedabad and are in the old regime, check that payroll computes your HRA at 50%, not the old 40%.

📄What changed from Form 12BB to Form 124?

ItemBefore (till 31 Mar 2026)Now (Tax Year 2026-27)
Form12BB (Rule 26C)124 (Rule 205)
HRA 50% cities4 metros8 cities
Landlord detailsPAN if rent > ₹1 lakhPAN if rent > ₹1 lakh + relationship
Children education allowance₹100/month/child₹3,000/month/child
Hostel allowance₹300/month/child₹9,000/month/child

🧾Form 124 documents checklist

ClaimProof to keep ready
HRARent agreement, rent receipts / bank proof, landlord name, address, PAN (if rent > ₹1 lakh), relationship
LTATickets / boarding passes (domestic travel)
Home-loan interestLender name, address, PAN; interest certificate
80C-type investments, health insurance, NPSReceipts, premium statements, contribution proofs

🧮HRA 50% vs 40%: worked example

Priya works in Pune (old regime). Basic + DA: ₹6,00,000 a year. HRA received: ₹3,00,000. Rent paid: ₹3,60,000.

  • Actual HRA received: ₹3,00,000
  • Rent minus 10% of salary: ₹3,60,000 − ₹60,000 = ₹3,00,000
  • 50% of salary (new 8-city rule): ₹3,00,000 (at 40% it was ₹2,40,000)

Exempt HRA = lowest = ₹3,00,000 (earlier ₹2,40,000).

Extra exemption ₹60,000 → tax saved ≈ ₹18,720 at 30% slab + 4% cess

⚠️ New regime? It is the default. HRA, LTA and most deductions are not allowed there, so Form 124 claims mostly matter only if you have opted for the old regime with your employer. The standard deduction needs no declaration.

✅How to submit Form 124: 5 steps

Confirm your regime with HR. Compare old vs new using your real numbers first.
Collect proofs for April 2026 to date; plan the rest before 31 March 2027.
Fill Form 124 on the payroll portal: Part A (your details), Part B (claims).
Changed jobs this year? Give the new employer previous salary and TDS details in Form 122.
Check Jan–Feb payslips to see your claims reflected in TDS. Keep copies for your ITR.

❓FAQs on Form 124

Is Form 124 the same as Form 12BB?

Yes. Form 124 replaces Form 12BB from Tax Year 2026-27 under the new Income-tax Rules 2026.

What is the last date to submit Form 124?

The law sets no single date. Follow your employer's cut-off; missed claims can still be made in your ITR.

Is landlord PAN mandatory for HRA in 2026-27?

Yes, if total rent paid in the tax year is over ₹1,00,000. Aadhaar is not mandatory unless the employer asks.

Which cities get 50% HRA exemption from 2026-27?

Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad. Others get 40%. Old regime only.

Do I need Form 124 in the new tax regime?

Usually not, as most claims in the form are not allowed in the new regime.

Not sure whether old or new regime suits you, or how much HRA you can claim?
Talk to a Chartered Accountant before your payroll cut-off.

📞 Call 77602 52581

📚 References: Rule 205, Income-tax Rules 2026 · Form 124 FAQs (Income Tax Department) · Form No. 124
Disclaimer: General information as of 31 Oct 2026, not professional advice; check your facts and the latest notifications before acting.

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