⚡ 10-Second Decision Box
Should you switch to the Old Tax Regime?
Calculate your Total Deductions including HRA, Section 80C, and Home Loan Interest.
- If Deductions exceed ₹3.75 Lakhs: Switch to the OLD REGIME by submitting Form 12BB.
- If Deductions are below ₹3.75 Lakhs: Stay in the NEW REGIME and do nothing.
Payroll Advisory – Feb 13, 2026
Subject: Form 12BB Submission & Default Tax Rule
Deadline: February 20, 2026
Warning: Failure to submit will trigger higher tax deduction in March salary.
New Delhi: The financial year 2025-26 is coming to a close, and Drawing and Disbursing Officers are finalizing tax liabilities for all employees. It is crucial to remember that under Section 115BAC of the Income Tax Act, the New Tax Regime is now the default option. If you do not submit Form 12BB along with valid investment proofs by the February 20 deadline, your salary for February and March will automatically be processed under the New Regime. This prevents you from claiming HRA and Section 80C deductions, which could reduce your take-home pay by ₹15,000 to ₹50,000.
Clarification: The Standard Deduction stands at ₹75,000 for the New Regime and ₹50,000 for the Old Regime. The rumors regarding a hike to ₹1 Lakh were not approved in the 2026 Budget.
1. Case Study: Level 10 Officer
To demonstrate the impact of the ₹3.75 Lakh Rule, let us analyze the tax liability for a Section Officer earning a Gross Salary of ₹15,00,000.
| Component | New Regime (Default) | Old Regime (With Deductions) |
|---|---|---|
| Gross Salary | ₹15,00,000 | ₹15,00,000 |
| Std Deduction | (-) ₹75,000 | (-) ₹50,000 |
| 80C (PF/LIC) | Not Allowed | (-) ₹1,50,000 |
| HRA Exemption | Not Allowed | (-) ₹2,50,000 |
| Taxable Income | ₹14,25,000 | ₹10,50,000 |
| Tax Payable | ₹1,45,600 | ₹1,24,800 |
| Verdict | Pay ₹20,800 Extra | Save ₹20,800 |
The Lesson: Even with moderate claims, the Old Regime saves money for this salary bracket. Missing the deadline means paying an extra ₹20,800 immediately.
2. The AIS Landlord Trap
This is a significant compliance risk for 2026. Many employees submit rent receipts to claim HRA without realizing that the Income Tax Department has upgraded its Annual Information Statement mapping.
How the System Works
- Step 1: You submit the landlord’s PAN in Form 12BB to claim HRA over ₹1 Lakh.
- Step 2: Your office uploads this data in the quarterly TDS return.
- Step 3: The system automatically populates this rent amount as “Rental Income” in your landlord’s AIS and Form 26AS.
- Step 4: If your landlord fails to declare this income in their tax return, both parties may receive a High Value Transaction Notice.
Warning: Do not use a relative’s PAN without their knowledge as it will increase their tax liability instantly.
3. Form 12BB Checklist
Ensure the following three documents are attached to your submission to avoid rejection by the Accounts Section.
- House Rent Allowance: Rent Receipt plus the landlord’s PAN is mandatory if annual rent exceeds ₹1 Lakh.
- Housing Loan: A Provisional Interest Certificate from the bank for the financial year 2025-26.
- Section 80C: Current year PPF passbook entry or tuition fee receipts.
Can I switch regimes if I miss the deadline?
Yes. If your office deducts extra tax under the New Regime now, you can still switch to the Old Regime while filing your Income Tax Return in July 2026 and claim a refund. However, your monthly cash flow will be reduced for the next three months.
Is medical insurance allowed in the New Regime?
No. Section 80D deductions for health insurance premiums are not allowed in the New Tax Regime. They are available only in the Old Regime up to ₹25,000 for self and ₹50,000 for senior parents.
हिंदी सारांश: टैक्स डेडलाइन और HRA का सच
10 सेकंड का फैसला: अगर आपकी कुल बचत ₹3.75 लाख से ज्यादा है, तो 20 फरवरी तक फॉर्म 12BB भरकर Old Regime चुनें। इससे कम होने पर New Regime में ही रहें।
HRA की चेतावनी: अगर आप HRA क्लेम करने के लिए मकान मालिक का PAN दे रहे हैं, तो सावधान रहें। यह रकम उनके टैक्स रिकॉर्ड में अपने आप दिख जाएगी। अगर उन्होंने टैक्स नहीं भरा, तो नोटिस आपको भी आएगा।
सैलरी कट: फॉर्म जमा नहीं किया तो मार्च की सैलरी में भारी टैक्स कट सकता है।
