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Economic Times
4 days ago
- Business
- Economic Times
LTA exemption in new tax regime: Can you claim leave travel allowance exemption in new tax regime or is it taxable?
From April 1, 2025, the new tax regime has become more attractive than the old tax regime for a larger number of taxpayers. This is because zero tax is payable on net taxable income up to Rs 12 lakh for FY 2025-26 under the new tax regime. Taxpayers often look for deductions from their gross income to reduce taxable income to Rs 12 lakh or below in order to pay zero tax under the new tax regime. Many would like to know if they can claim leave travel allowance (LTA) deduction via travel bills under the new tax regime or Wealth online tells you if you can claim exemption on leave travel allowance for the FY 2025-26 under the new tax regime. According to income tax rules, LTA exemption is not available under the new tax regime. An individual opting for the new tax regime for FY 2025-26 and getting LTA from their employer cannot claim exemption using it. The tax exemption on LTA is not available under the new tax regime. Hence, if you have received LTA as a part of Cost-to-Company (CTC) and opt for the new tax regime for TDS on salary for FY 2025-26, then LTA will be taxable even if you submit bills of travel. For private sector employees, LTA tax exemption is available if they opt for the old tax regime for FY 2025-26 to pay tax. However, specific rules prescribed under the Income Tax Act, 1961, must be followed to claim LTA exemption under the old tax regime. In the old tax regime, LTA exemption is available under Section 10(5) of the Income Tax the LTA exemption is available twice in a four-year block. The current block extends from January 1, 2022, to December 31, 2025. A taxpayer can claim LTA exemption on a maximum of two journeys in this an employee is unable to undertake a journey/claim LTA in the block, then one journey/LTA can be carried forward to the first year of the next block. Abhishek Soni, CEO, - an ITR filing website, says, "The LTA exemption rules for government employees are not different vis-à-vis those for private sector employees. The income tax laws allow government employees to claim LTA exemption twice in a block of four years, either to visit their hometown or to any place in India. Further, this exemption will be available if the government employee opts for the old tax regime in a particular financial year. No LTA exemption can be claimed under the new tax regime."Soni explains the conditions that a taxpayer must meet to claim LTA exemption under the old tax regime. a) LTA part of salary: An employee must be receiving LTA as part of his/her salary from his/her employer. b) Submission of travel bills: Employees must submit the bills and other travel documents to their employer before the date specified by the employer for doing so, to claim tax exemption in a particular financial year. c) No international vacation: The LTA exemption is available for travel within India and cannot be claimed for international travel. d) Cost of travelling for specific family members: The LTA tax exemption can also be claimed for cost of travel of accompanying family members. For this purpose, family members can include spouse, children, dependent parents, and dependent siblings. e) Covers only mode of travel: LTA exemption rules cover only cost incurred for actual transportation for travel, including by air, train, or road. LTA exemption is not allowed for cost of hotel bookings and food expenses during the trip. The maximum LTA exemption that can be claimed depends on the actual cost incurred on transportation and the LTA amount allowed by the employer. Soni says, "The LTA exemption is allowed for the cost of the shortest journey (either by bus, train or air) from the employee's place of residence to the travel destination and back. If the LTA offered by the employer is less than the actual cost incurred on transportation, the exemption would be limited to the LTA allowed by the employer and not the actual costs incurred."
Time of India
08-05-2025
- Business
- Time of India
Won money on Dream11, My11Circle? Know income tax rules for this casual income
Dream11 win: Winnings from lottery, online gaming, online sports betting, etc., are considered casual income for income tax purposes, as per tax experts. However, taxpayers are not aware of the tax rate applicable on casual income earned. Read on to know the latest income tax rules if money is earned from sports betting, and the penal consequences if it is not reported. Tired of too many ads? Remove Ads Earnings from sports betting and online gaming are casual income Tired of too many ads? Remove Ads Under which section are winnings from online gaming and sports betting taxed? Income tax rate for winnings from online games Can you claim any deductions on income in the form of winnings from online games? How are winnings from Dream11 and online games taxed? Tired of too many ads? Remove Ads Penalty for not disclosing casual income in ITR The Indian Premier League (IPL) is currently underway, and many people are earning money through sports betting apps, such as Dream11 , My11Circle, etc. However, few individuals are aware of the income tax rules concerning earnings from these sporting apps and the potential penalties for not reporting this income to the tax Wealth online decodes the income tax rules applicable to this casual income and the penalties for failing to pay tax on to tax experts, winnings from lottery, online gaming, online sports betting, etc., are considered casual income for income tax Surana, a practising chartered accountant, says, "Casual income under the Income-tax Act, 1961, refers to the income that is received on an irregular, non-recurring basis. Such income is characterised by its uncertain and non-recurring nature and is typically derived without any systematic or organised effort by the recipient."Hemen Asher, Partner, Bhuta Shah & Co LLP, says, "Casual income is irregular and non-recurring in nature and also includes any income which is not captured under any other head of income. Examples of casual income include winnings/earnings from crossword puzzles, lotteries, races (including horse races), games in the nature of betting/gambling, card games, game shows and online gaming, etc."Surana says, "Such income is taxable under the head income from other sources, as per Section 56(2)(ib) read with Section 2(24)(ix) of the Income Tax Act. In the ITR form, you are required to disclose the earnings under the section 'income from other sources.'"The Income Tax Act mentions a special tax rate at which winnings from online games, sports betting, and other casual income are says, "The taxation of casual income is subject to a special tax rate. It is taxed at a flat rate of 30% under section 115BB/115BBJ of the Income Tax Act. The applicability of the section depends on the source of income. Additionally, a surcharge and health and education cess will be applied to the special rate."According to the Income Tax Act, Section 115BB is applicable to income which includes winnings from any lottery, crossword puzzle, or race, including a horse race or card game and other games of any sort or from gambling or betting of any form. On the other hand, Section 115BBJ applies to winnings from online deducted at source (TDS) will also apply to the casual income. Surana says, "TDS at the rate of 30% applies to such winnings, as per Sections 194B/194BA/194BB of the Income Tax Act if the winnings amount exceeds Rs 10,000 per transaction. It is pertinent to note that such threshold of Rs. 10,000 only applies in case of Section 194B and 194BB, as no threshold limit is applicable in case of Section 194BA w.r.t. winnings from online games."Currently, the Income Tax Act has two tax regimes: the old and the new. The old tax regime offers various deductions to individual taxpayers. However, not many deductions are available for taxpayers in the new tax says, "No deductions for any expenditure or allowance are permitted against such income i.e., winnings from online games etc. Further, taxpayers cannot claim any deductions, such as sections 80C, 80D, etc., from casual income in any tax regime."Asher says, "The winnings earned from online gaming apps and betting apps are taxed on a gross basis. The benefit of the basic exemption limit is also not applicable to the casual income. This means that even if your total income, excluding winnings from online games and fantasy games, is below the basic exemption limit, ITR filing is mandatory to pay tax on the casual income."Asher explains this with an example. Suppose your total income is Rs 2.5 lakh, and you additionally have winnings from Dream11 amounting to Rs 50,000. Your total income, including winnings from Dream11, is Rs 3 lakh, which is below the basic exemption limit of Rs 4 lakh under the new tax regime for FY 2025-26. However, you are required to pay tax on winnings of Rs 50,000 from Dream11 at a special tax rate of 30%, in addition to health and education cess, and file your ITR as per the income tax income in the form of winnings from online games is taxable in the hands of a taxpayer. If the winnings are not disclosed, the taxpayer may face some penal says, "Upon detection, penalties can be levied under Section 270A for under-reporting or misreporting income. The penalties may range from 50% to 200% of the amount of tax payable on such disclosed income. Further, interest under Sections 234B and 234C may apply to late advance tax payments. In cases of deliberate tax evasion through non-reporting or under-reporting, a taxpayer may also be subject to prosecution."Asher says, "Non-reporting of casual income could potentially lead to scrutiny by the tax authorities, resulting in additional litigation costs. Therefore, one must take appropriate safeguards and ensure that all casual income one earns is duly captured and reported in the tax return, and the due taxes are paid."
Economic Times
08-05-2025
- Business
- Economic Times
Won money on Dream11, My11Circle? Know income tax rules for this casual income
Dream11 win: Winnings from lottery, online gaming, online sports betting, etc., are considered casual income for income tax purposes, as per tax experts. However, taxpayers are not aware of the tax rate applicable on casual income earned. Read on to know the latest income tax rules if money is earned from sports betting, and the penal consequences if it is not reported. Tired of too many ads? Remove Ads Earnings from sports betting and online gaming are casual income Tired of too many ads? Remove Ads Under which section are winnings from online gaming and sports betting taxed? Income tax rate for winnings from online games Can you claim any deductions on income in the form of winnings from online games? How are winnings from Dream11 and online games taxed? Tired of too many ads? Remove Ads Penalty for not disclosing casual income in ITR The Indian Premier League (IPL) is currently underway, and many people are earning money through sports betting apps, such as Dream11 , My11Circle, etc. However, few individuals are aware of the income tax rules concerning earnings from these sporting apps and the potential penalties for not reporting this income to the tax Wealth online decodes the income tax rules applicable to this casual income and the penalties for failing to pay tax on to tax experts, winnings from lottery, online gaming, online sports betting, etc., are considered casual income for income tax Surana, a practising chartered accountant, says, "Casual income under the Income-tax Act, 1961, refers to the income that is received on an irregular, non-recurring basis. Such income is characterised by its uncertain and non-recurring nature and is typically derived without any systematic or organised effort by the recipient."Hemen Asher, Partner, Bhuta Shah & Co LLP, says, "Casual income is irregular and non-recurring in nature and also includes any income which is not captured under any other head of income. Examples of casual income include winnings/earnings from crossword puzzles, lotteries, races (including horse races), games in the nature of betting/gambling, card games, game shows and online gaming, etc."Surana says, "Such income is taxable under the head income from other sources, as per Section 56(2)(ib) read with Section 2(24)(ix) of the Income Tax Act. In the ITR form, you are required to disclose the earnings under the section 'income from other sources.'"The Income Tax Act mentions a special tax rate at which winnings from online games, sports betting, and other casual income are says, "The taxation of casual income is subject to a special tax rate. It is taxed at a flat rate of 30% under section 115BB/115BBJ of the Income Tax Act. The applicability of the section depends on the source of income. Additionally, a surcharge and health and education cess will be applied to the special rate."According to the Income Tax Act, Section 115BB is applicable to income which includes winnings from any lottery, crossword puzzle, or race, including a horse race or card game and other games of any sort or from gambling or betting of any form. On the other hand, Section 115BBJ applies to winnings from online deducted at source (TDS) will also apply to the casual income. Surana says, "TDS at the rate of 30% applies to such winnings, as per Sections 194B/194BA/194BB of the Income Tax Act if the winnings amount exceeds Rs 10,000 per transaction. It is pertinent to note that such threshold of Rs. 10,000 only applies in case of Section 194B and 194BB, as no threshold limit is applicable in case of Section 194BA w.r.t. winnings from online games."Currently, the Income Tax Act has two tax regimes: the old and the new. The old tax regime offers various deductions to individual taxpayers. However, not many deductions are available for taxpayers in the new tax says, "No deductions for any expenditure or allowance are permitted against such income i.e., winnings from online games etc. Further, taxpayers cannot claim any deductions, such as sections 80C, 80D, etc., from casual income in any tax regime."Asher says, "The winnings earned from online gaming apps and betting apps are taxed on a gross basis. The benefit of the basic exemption limit is also not applicable to the casual income. This means that even if your total income, excluding winnings from online games and fantasy games, is below the basic exemption limit, ITR filing is mandatory to pay tax on the casual income."Asher explains this with an example. Suppose your total income is Rs 2.5 lakh, and you additionally have winnings from Dream11 amounting to Rs 50,000. Your total income, including winnings from Dream11, is Rs 3 lakh, which is below the basic exemption limit of Rs 4 lakh under the new tax regime for FY 2025-26. However, you are required to pay tax on winnings of Rs 50,000 from Dream11 at a special tax rate of 30%, in addition to health and education cess, and file your ITR as per the income tax income in the form of winnings from online games is taxable in the hands of a taxpayer. If the winnings are not disclosed, the taxpayer may face some penal says, "Upon detection, penalties can be levied under Section 270A for under-reporting or misreporting income. The penalties may range from 50% to 200% of the amount of tax payable on such disclosed income. Further, interest under Sections 234B and 234C may apply to late advance tax payments. In cases of deliberate tax evasion through non-reporting or under-reporting, a taxpayer may also be subject to prosecution."Asher says, "Non-reporting of casual income could potentially lead to scrutiny by the tax authorities, resulting in additional litigation costs. Therefore, one must take appropriate safeguards and ensure that all casual income one earns is duly captured and reported in the tax return, and the due taxes are paid."
