Salary Advance Recovery in India: Rules, 50% Cap and Tax

A salary advance is part of an employee's wages paid before the date they fall due, and an employee loan is a larger sum lent by the employer and repaid over months. Both are usually recovered by deduction from salary, and in India both recoveries are governed by the Code on Wages, 2019. The rule that matters most is short: all deductions in a wage period together cannot exceed 50% of that period's wages, and under rule 13 of the Code on Wages (Central) Rules, 2026, anything above the line is carried forward to later months in instalments.

Advance schemes are often run informally. Someone's father is in hospital, the plant manager calls HR, ₹40,000 goes out the same afternoon, and payroll is told to take it back over three months. That works until a month with heavy loss of pay, an employee who resigns with a balance outstanding, or an inspector who asks for the register. Each of those is now covered by specific provisions: section 18 of the Code, and rules 13, 19, 20 and 51 of the Code on Wages (Central) Rules, 2026, notified on 8 May 2026.

The tax side changed in 2026 as well. The Income-tax Rules, 2026 raised the threshold for a taxable loan perquisite from ₹20,000 to ₹2 lakh from 1 April 2026, which takes most small employee loans out of the perquisite question entirely and leaves the larger ones inside it.

This post is for whoever runs payroll or owns the advance policy, and especially for a payroll lead who has been recovering a fixed EMI every month without checking it against anything. Jump to the 50% cap if you need the arithmetic, to the loan tax example if you lend more than ₹2 lakh, to exit recovery if someone has just resigned owing money, or to the sample clauses if you are drafting.

Nothing here is legal or tax advice. Wage deductions are governed by the Code on Wages and by the wage rules of the appropriate government, which for most private employers is the state, and those rules are not yet final everywhere. Have the policy reviewed against the rules that apply to your establishment. Law as at 9 November 2026.

What is the difference between a salary advance and an employee loan?

A salary advance is wages paid early. It is usually small, at most a month or two of net pay, and it comes back out of the next few payslips without interest. An employee loan is a separate sum lent for a stated purpose such as a house, a vehicle, education or a medical bill. It is larger, it is repaid over many months, and it may carry interest at a concessional rate.

The distinction has legal consequences. The Code on Wages authorises the two recoveries under different clauses, the wage rules attach different conditions to each, and the Income-tax Rules treat them differently. An advance against wages is salary paid early. A loan is not salary at all, and the only tax question it raises is whether the interest the employee did not pay is a perquisite.

The two are often blurred. A ₹1.5 lakh "advance" repaid over two years is a loan whatever the form calls it, and it should be documented and taxed as one. The test is the substance: wages paid early and recovered from the wages they anticipate, or money lent and repaid on a schedule.

What does the Code on Wages say about recovering advances and loans?

The Code on Wages, 2019 came into force with the other Labour Codes on 21 November 2025 and repealed the Payment of Wages Act, 1936. Deductions from wages now sit in Chapter III of the Code. Section 18(1) says no deduction can be made except those the Code authorises, and its Explanation adds that any payment by the employee to the employer counts as a deduction. Asking the employee to transfer an instalment back by UPI is therefore still a deduction, and still inside the cap.

The Central Rules fill in the detail. They apply directly where the Central Government is the appropriate government, which covers banks, insurance companies, mines, central public sector undertakings and their contractors. For everyone else the state's wage rules apply, and those follow the central text closely where they have been finalised. The table sets out the provisions payroll actually uses.

The Ministry of Labour and Employment's FAQ on the Code states the change in one line: the Code caps all deductions at 50% of wages. Under the Payment of Wages Act the ceiling rose to 75% where part of the deductions went to cooperative societies. That higher ceiling is gone.

Rule 20 deserves a plain word. For loans, the Central Rules say recovery and interest follow the extant instructions or guidelines of the Central Government. There is no general set of such instructions for private employers, so in practice the rule gives a private company very little to follow. The loan policy has to do the work instead: the purposes, the ceiling, the rate and the tenure should all be written down, because nothing else will say them for you.

The loan clause has a limit of its own. Section 18(2)(g) covers loans "granted for house-building or other purposes approved by the appropriate Government". A general-purpose loan, such as one for a family wedding, fits that clause only if its purpose has such approval. Where it does not, the recovery is usually run as the recovery of an advance under clause (f)(i), which covers "advances of whatever nature" and the interest due on them. The Code does not define an advance, so that is a reading and not a settled rule. Written consent does not fill the gap: section 18(1) allows only the deductions the Code authorises, "notwithstanding anything contained in any other law", and its Explanation treats any payment back to the employer as a deduction. Either way, the instalment stays inside the 50% cap, is carried forward under rule 13 and is recorded in Form IV. Have the treatment of non-housing loans checked against your state's wage rules.

How does the 50% deduction cap work?

Add up every deduction from wages in the month: employee PF, ESI, professional tax where it applies, labour welfare fund, TDS, any fine, any damage recovery, and every advance or loan instalment. The total cannot exceed half of the wages payable for that month. If it does, the instalment shrinks and the difference moves to the following month.

The base is the wages actually payable for the period, after loss of pay. Section 18(3) caps deductions at 50% "of such wages", meaning the wages from which the deductions are made. For the purpose of payment of wages, the second proviso to section 2(y) brings house rent allowance, conveyance allowance, overtime and award remuneration back into wages even though the main definition excludes them. On that reading, the base is basic, dearness allowance, retaining allowance, HRA, conveyance, special and other allowances, and overtime. Reimbursements, commission, bonus, employer PF and gratuity stay outside it. The Ministry of Labour and Employment was asked in its FAQ compilation (as on 25 October 2026, questions 34 to 37) whether the cap runs on wages as defined or on gross pay, and whether TDS sits outside it; its answers repeat section 18(3) and rule 13 without deciding either point. Section 18(2)(b) also lists deductions for absence, and this post follows the common approach of applying the cap to wages payable after loss of pay.

That base is wider than the 50% wage definition many payroll teams have just built for PF and gratuity. Do not reuse it. The wage figure that decides the deduction cap is the payable figure for the month, allowances included, and the salary allowances guide sets out which components are which.

A common shortcut is to test the instalment against half of gross pay and stop there. The cap is on total deductions, and statutory deductions sit inside it. In a normal month, employee PF at 12% of PF wages, ESI where it applies, and a few hundred rupees of professional tax leaves plenty of room under the line. The cap starts to bite when wages fall and the instalment does not.

What happens to an instalment in a month with heavy loss of pay?

The instalment is reduced to whatever fits under the cap, and the rest is carried forward under rule 13. A worked example shows the arithmetic.

Ravi is a machine operator in Pune. His gross monthly wages are ₹32,000, of which basic and DA are ₹16,000. In October he takes a ₹30,000 advance against unearned wages, to be recovered at ₹10,000 a month over November, December and January. His TDS is nil. Maharashtra professional tax is ₹200 a month at his pay, rising to ₹300 in February. The other ₹16,000 is HRA and conveyance allowance, which section 2(88) of the Code on Social Security, 2020 leaves out of wages. At exactly half his pay they add nothing back, so his wages for PF and ESI are ₹16,000. That is within the ₹21,000 ESI ceiling, so ESI at 0.75% applies.

In December Ravi had 12 days of loss of pay. His wages fell to ₹19,200 and the cap fell with them, to ₹9,600. PF and ESI fell too, because both are calculated on wages actually earned. The full instalment would have taken total deductions to ₹11,424, which is ₹1,824 over the cap. Payroll recovers ₹8,176 and carries ₹1,824 forward. January's instalment becomes ₹11,824, and with PF, ESI and PT the month's deductions come to ₹14,064, well inside a full month's cap of ₹16,000. The advance closes on schedule.

The Form IV entry for December shows ₹8,176 recovered and ₹11,824 outstanding. The payslip should show the same two figures on a named line, so that Ravi can see why his take-home did not fall by the full ₹10,000 and why January's deduction is larger.

Two things go wrong here in practice. The first is recovering the full ₹10,000 in December because the EMI is "fixed", which breaches section 18(3) and leaves Ravi with ₹7,776 in hand for the month. The second is dropping the ₹1,824 entirely because the system had no way to carry it, which surfaces months later as an unexplained balance. A carry-forward that exists only in someone's spreadsheet is the usual cause of both.

Can an overpayment or a joining advance be recovered from wages?

An overpayment can be recovered, within the cap. A travel advance given before joining cannot be recovered from wages at all.

Section 18(2)(f)(i) puts the adjustment of overpaid wages under the same head as advances. An overpayment is therefore recovered like an advance: by deduction, inside the 50% ceiling, with any excess carried forward under rule 13. The common error is to reverse an overpayment in full in the next run because it was the company's mistake to begin with. That is precisely the case the cap is designed for. A payroll error of ₹25,000 reversed in one month can leave an employee with almost nothing, and the employee did nothing wrong. Agree a schedule, record it, and recover it the same way you would an advance.

Section 23(a) deals with money given before employment began. An advance given before the employee joined is recovered from the first payment of wages for a complete wage period. The same clause then says no recovery shall be made of such advances given for travelling expenses. A relocation or joining travel advance is therefore not recoverable from wages, and a clause in an offer letter saying otherwise does not change that. If the company wants the money back when someone leaves within a year, the route is a separately agreed repayment obligation that falls due after employment ends and is collected outside payroll. While the employee is still employed, section 18(1) treats any payment back to the employer as a deduction.

When is an interest-free loan from the employer taxable?

Only when the employee's loans from the employer add up to more than ₹2 lakh. From 1 April 2026, rule 15 of the Income-tax Rules, 2026 assigns no perquisite value where the loans do not exceed ₹2,00,000 in the aggregate, or where the loan is for treatment of the diseases specified in rule 18, to the extent the cost is not reimbursed by insurance. The limit under rule 3(7)(i) of the Income-tax Rules, 1962 was ₹20,000, so the change is large.

Above the threshold, the perquisite is interest at the rate State Bank of India charged on the first day of the tax year for a loan of the same type, calculated on the maximum outstanding monthly balance, less any interest the employee actually paid. The maximum outstanding monthly balance means the balance on the last day of each month.

The ₹2 lakh figure is a threshold test and is not subtracted from the balance. If the aggregate crosses it, the whole balance is valued, including the first ₹2 lakh. A ₹3 lakh loan is valued on ₹3 lakh. The test also runs on the aggregate of all loans from the employer, so two loans of ₹1.2 lakh each cross it together even though neither would alone.

The perquisite is added to salary and TDS is deducted on it under both the old and the new regime, since perquisite taxation does not depend on the regime chosen. It is reported in Form 123, which replaced Form 12BA, and flows into the employee's Form 130, which replaced Form 16. Our TDS on salary guide covers how a perquisite changes the monthly TDS projection.

If the perquisite is left until the annual tax computation in February, the tax on it has to be recovered in two months instead of twelve. The perquisite accrues monthly, so compute it monthly.

How much tax does a ₹3 lakh interest-free loan create?

On a typical schedule, about ₹19,800 of taxable perquisite in the first year at SBI's published personal loan rate of 12.68%, which is around ₹5,900 of extra tax at the 30% slab before cess. A worked example shows where the figures come from.

Priya, an accounts manager in Bengaluru, takes a ₹3,00,000 interest-free loan from her employer in June 2026 for her sister's wedding. Recovery is ₹25,000 a month from July. Rule 15 values the loan at the annual rate SBI charged on 1 April 2026, the first day of the tax year, for loans for the same purpose, so a general-purpose loan takes SBI's personal loan rate. SBI publishes these rates for perquisite valuation. For personal loans on 1 April 2026 its page shows a mean rate of 12.68%, alongside a band of 10.00% to 15.00% (the two-year MCLR of 8.75% plus a spread of 1.25% to 6.25%). The example uses the 12.68% mean. Whichever figure from that page you use, fix it in the loan policy and apply it to everyone. A loan for education or a car takes SBI's rate for that class of loan instead.

Interest-free, Priya's taxable perquisite for 2026-27 is ₹19,812.50. If the company charges 6% instead, she pays ₹9,375 in interest over the same months and the perquisite falls to ₹10,437.50. At the 30% slab, that is about ₹5,940 of extra tax on the interest-free loan and about ₹3,130 at 6%, before cess. The employee saves more in interest than the tax costs her either way, and the concessional rate cuts the tax by almost half and makes the TDS correction smaller.

Every month counts, including the months after the balance falls below ₹2 lakh. The Income Tax Department's guidance on the earlier rule said that a loan which started above the limit does not become exempt once it is repaid below it, and rule 15 keeps the same "in the aggregate" wording. Had Priya borrowed ₹1,80,000, there would be no perquisite at all, in any month.

Is a salary advance taxed when it is paid?

It depends on what the advance is, and the treatment is not settled. Salary paid before it falls due is taxed when paid: section 15(1)(b) of the Income-tax Act, 2025 charges salary paid or allowed in a tax year even though it is not yet due, and section 15(3) stops the same amount being taxed again when it falls due. An advance that is repaid in instalments from later wages is often treated as a loan to the employee instead, which is taxed only through the loan perquisite rule in section 6. Agree the treatment with your tax adviser, write it into the policy, and apply it the same way to everyone.

Where an advance is treated as advance salary, for most advances this changes nothing, because the advance is paid and recovered within one tax year. It matters for an advance paid in February or March against wages due in April or later. The income moves into the earlier year, and if that pushes the employee into a higher slab, relief is available under section 157(1) of the 2025 Act. The employee claims it by filing Form 39, which replaced Form 10E for tax years from 2026-27.

A loan is not salary, and the amount lent is not taxed. Only the interest benefit can be a perquisite, under the rule explained in section 6. This is one more reason to document a two-year loan as a loan.

What happens to the balance when an employee leaves?

Payroll recovers what it can from the final wages, within the 50% cap for that wage period, and the rest has to be collected outside payroll. Under section 17(2) of the Code, wages are due within two working days of resignation, removal, dismissal or retrenchment. The cap applies to that last payment like any other, and there is no later wage period to carry an excess into.

Take an employee who resigns with ₹60,000 of a loan outstanding and final wages of ₹50,000. After PF, PT and TDS, perhaps ₹20,000 of the ₹25,000 cap is left for the loan. The other ₹40,000 cannot come out of wages. Every component paid in the full and final settlement as wages sits inside the same calculation, so a bigger settlement raises the cap but does not remove it.

That is why the loan agreement matters. It should say that any balance outstanding on the last working day becomes payable at once, that the company will recover what it lawfully can from final wages, and that the employee will repay the remainder by bank transfer within a fixed period. After employment ends, what is left is a debt between two parties. A signed agreement makes it a debt the company can prove.

Do not plan on taking the balance from gratuity. Gratuity is outside the Code's definition of wages, and section 53(6) of the Code on Social Security, 2020 allows forfeiture only on termination for damage to the employer's property, riotous or disorderly conduct or violence, or an offence involving moral turpitude. On that basis the Karnataka High Court held a loan deduction from gratuity illegal in KSRTC v. Deputy Labour Commissioner (decided 2011, reported 2012-III-LLJ-355), a case about deducting a loan from gratuity under the Payment of Gratuity Act, 1972. The Supreme Court did allow penal rent for a company house to be adjusted against gratuity in SAIL v. Raghbendra Singh (2020), and again in SAIL v. Shambhu Prasad Singh (2026 INSC 263). Both cases were about employees who kept company quarters past retirement, under SAIL's own gratuity rules. Neither touches recovery of a loan, and neither is a licence to net a loan off gratuity. Our gratuity calculation guide covers how gratuity itself is worked out.

Notice-period shortfall is a separate recovery from the advance and should be computed separately. When both are outstanding at once, the order of recovery inside the cap should be fixed in the policy in advance.

What should a salary advance and loan policy say?

The policy should say who is eligible, how much can be advanced or lent, how recovery is scheduled, what interest is charged, what happens on exit, and what the employee sees. The sample below covers both advances and loans. Every bracketed item is a decision for you to make before you use it.

Clause 1, eligibility. Salary advances are available to employees who have [completed probation]. Loans are available to employees with at least [one year] of continuous service. An employee may have no more than [one] advance and [one] loan outstanding at any time.

Clause 2, amounts and purposes. A salary advance may not exceed [one month's] net pay. A loan may not exceed [₹X or three months' gross pay, whichever is lower] and is available for [housing, vehicle, education, medical treatment, and family events]. Requests state the amount and purpose and are approved by [the reporting manager and the HR head].

Clause 3, recovery. Before any money is paid, the company and the employee agree in writing the start month, the monthly instalment and the end month. Instalments are recovered from wages. In any wage period, the total of all deductions from wages, including the instalment, will not exceed fifty per cent of the wages payable for that period. Any amount that cannot be recovered in a period because of that limit is carried forward and recovered in later periods.

Clause 4, interest and tax. Salary advances are interest-free. Loans carry interest at [x]% a year, calculated on the balance at the end of each month. Where an employee's loans from the company exceed ₹2,00,000 in the aggregate, the interest benefit is a taxable perquisite valued under rule 15 of the Income-tax Rules, 2026, and tax will be deducted on it monthly. The company uses the rate SBI publishes for perquisite valuation for the relevant loan class on 1 April of each tax year, [the mean rate / another stated figure from that page].

Clause 5, exit. Any balance outstanding on the employee's last working day becomes payable on that day. The company will recover it from final wages within the fifty per cent limit in clause 3. The employee will repay any remainder by bank transfer within [thirty] days of the full and final settlement. The company will not recover any balance from gratuity.

Clause 6, records and visibility. Every advance, loan and recovery is recorded in the register of wages, advances and deductions. Each payslip shows the instalment recovered and the balance outstanding on a separate line.

Do not drop clauses 3 and 5 when editing. Clause 3 is the 50% cap and rule 13 written in terms an employee can read, and it is the part that protects the company if an instalment is ever challenged. Clause 5 is the only thing that makes a balance recoverable once the employee has gone. Clause 4's rate choice should be applied the same way every year.

If you start from our HR policy template, add this as a section of the compensation or payroll policy, so it is read with the pay terms it depends on.

What records does an inspector expect to see?

Form IV, the Register of Wages, Overtime, Advances, Fines and Deductions for Damage and Loss, under rule 51 of the Central Rules. It can be kept electronically or on paper, and it must be preserved for five years after the last entry. Rule 19 requires the particulars of each advance recovery to be recorded in it.

In practice the register should show, for each employee and each month, the advance or loan given, the instalment due, the instalment recovered, any amount carried forward, and the balance. If the pay register your payroll system produces already carries those columns, it can serve as Form IV. If it does not, the gaps are usually the carried-forward amount and the opening balance, because they live in a spreadsheet outside payroll.

The register matters most in a dispute. Under section 59 of the Code, where an employee claims that wages were not paid or that a deduction was not authorised, the burden of proving payment is on the employer. An advance with no request, no approval and no register entry is very hard to prove. An employee who says the ₹40,000 was a bonus and not an advance has, in practice, a strong position against a company that cannot show the paper.

Keep the request and approval with the employee record: the amount, the purpose, the approver and the date. Keep the signed schedule. Show the recovery on the payslip as a named line, never inside "other deductions", because an employee who cannot read the deduction will query it, and a query that reaches an inspector before it reaches HR is an expensive one.

One caveat on scope. State wage rules are at different stages, so check your state labour department's site for whether its rules are final. Where state rules are not final, the 50% cap in section 18(3) still applies directly, and following the central carry-forward method and Form IV is the safest practice. State rules can number these provisions differently, so check the state equivalent of rules 13, 19, 20 and 51 when they are notified. Our payroll compliance checklist tracks the other registers that sit beside Form IV.

What do employers ask most about salary advances?

How much salary advance can be deducted in one month?

As much as fits within 50% of that month's wages once PF, ESI, professional tax, TDS and any other deductions are counted. Rule 19 of the Code on Wages (Central) Rules, 2026 lets the employer fix the instalments, but any or all instalments in a wage period cannot take total deductions past 50% of wages. In a month with heavy loss of pay the cap falls with the wages, so the instalment has to be reduced and the difference carried to the next month.

Can an employer deduct more than 50% of salary to recover a loan?

No. Section 18(3) of the Code on Wages, 2019 caps total deductions at 50% of wages in any wage period, and that includes statutory deductions as well as the loan instalment. Rule 13 of the Central Rules says any excess is carried forward and recovered in instalments in later months, so that recovery in any month stays within the limit. The employee's consent does not raise the cap, and any payment the employee makes back to the employer counts as a deduction under section 18(1).

Is an interest-free loan from my employer taxable in 2026-27?

No, not if all your loans from the employer together do not exceed ₹2 lakh, or if the loan is for treatment of a disease specified in rule 18 of the Income-tax Rules, 2026. Above ₹2 lakh, rule 15 values the benefit as interest at SBI's rate for the same type of loan on 1 April, on the balance at the end of each month, less any interest you paid. That amount is a taxable perquisite under both the old and the new regime, and the whole balance is valued, including the first ₹2 lakh.

Is a salary advance taxable?

Yes, if it is treated as salary paid in advance: section 15 of the Income-tax Act, 2025 charges salary paid in a tax year even though it was not yet due, and does not tax it again when it falls due. An advance repaid in instalments is often treated as a loan instead, so agree the treatment with your tax adviser. If the advance pushes income into a higher slab, relief is available under section 157(1), claimed in Form 39, which replaced Form 10E. A loan from the employer is different: the amount lent is not salary, and only its interest benefit can be a perquisite.

Can a company recover an advance from the full and final settlement?

Yes, from the final wages, within the 50% cap for that wage period. Final wages are due within two working days of the exit under section 17(2) of the Code on Wages, and there is no later month to carry an excess into. A larger balance should be covered by the loan agreement and repaid by the former employee directly. Do not deduct it from gratuity, which can be forfeited only on the grounds in section 53(6) of the Code on Social Security, 2020.

Can an employer charge interest on a salary advance?

Yes. Section 18(2)(f)(i) of the Code on Wages permits recovery of advances and the interest due in respect of them, so interest can be charged, and the rate should be agreed in writing before the advance is paid. Short advances are commonly kept interest-free and charge a concessional rate only on longer loans. Charging interest on a loan above ₹2 lakh also reduces the employee's taxable perquisite, because rule 15 deducts the interest actually paid.

Which register records salary advances under the Labour Codes?

Form IV, the Register of Wages, Overtime, Advances, Fines and Deductions for Damage and Loss, under rule 51 of the Code on Wages (Central) Rules, 2026. It can be kept electronically or on paper and must be preserved for five years after the last entry. Rule 19 requires the particulars of every advance recovery to be recorded in it, and state rules prescribe their own equivalent where they apply.

Can a joining travel advance be recovered if the employee leaves early?

No, not from wages. Section 23(a) of the Code on Wages says an advance given before employment began is recovered from the first full wage period, but that no recovery shall be made of such advances given for travelling expenses. An offer letter clause cannot override that. If the company wants a relocation cost repaid when someone leaves early, it needs a separate repayment agreement that falls due after exit and is collected outside payroll.

How do you set up salary advance recovery in payroll?

Start with the cap, because every other step depends on it. Do these in order:

• Write the policy, using the sample in section 10, and decide the bracketed items before anyone asks for an advance.
• Check whether your state's wage rules are final, and confirm the state equivalent of rules 13, 19, 20 and 51 and the Form IV format.
• Move every open advance and loan into payroll with its original amount, schedule and current balance, so nothing lives only in a spreadsheet.
• Test the 50% cap after attendance closes and before the run is released, with all statutory deductions counted, and carry any shortfall forward.
• Track the ₹2 lakh aggregate per employee, and compute the loan perquisite monthly from the month it is crossed.
• Pull the outstanding balance into the full and final settlement on the day the resignation is accepted, so it is known well before the last working day.

If the system side is the gap, Engage's payroll software includes loan and advance management and full and final settlement in every plan, so advance requests, recovery schedules and exit balances sit in the same system as the monthly run. Pricing is on the site, so you can compare without a sales call.

Related reading: how to calculate payroll in India, payslip format in India, and Excel payroll versus payroll software.

Sources

• Code on Wages, 2019. India Code. Section 2(y) and its second proviso on wages for payment purposes; section 17(2) on payment on exit; section 18 on authorised deductions and the 50% cap; sections 23 and 24 on recovery of advances and loans; section 59 on burden of proof. In force from 21 November 2025.
• Code on Wages (Central) Rules, 2026. G.S.R. 343(E), Gazette of India, 8 May 2026. Rule 13 on carrying forward excess deductions; rules 19 and 20 on recovery of advances and loans; rule 51 and Form IV on registers and their preservation.
• Ministry of Labour and Employment, Compilation of FAQs on the four Labour Codes and Central Rules (as on 25 October 2026). Question 33 on the 50% ceiling; questions 34 to 37 on TDS, the wage base and carry-forward. The earlier Code on Wages FAQ notes the earlier 75% ceiling for cooperative deductions.
• Income-tax Act, 2025. Section 15 on salary paid in advance; section 157(1) on relief where salary is paid in advance or arrears. Income Tax Department guidance note on Form 39, which replaced Form 10E.
• Income-tax Rules, 2026 (notified text). Rule 15 on valuation of interest-free and concessional loans, including the ₹2,00,000 aggregate threshold and the exclusion for loans for diseases specified in rule 18; Form 39.
• Income Tax Department, taxability of concessional or interest-free loans. Guidance written for the Income-tax Act, 1961 and its earlier ₹20,000 limit, on the aggregate test and the position of a loan reduced below the threshold.
• State Bank of India, interest rates for perquisite calculation. Two-year MCLR of 8.75%, personal loan rates of 10.00% to 15.00% and a mean rate of 12.68% shown for 1 April 2026.
• Supreme Court, SAIL v. Shambhu Prasad Singh (2026 INSC 263, 18 March 2026), following SAIL v. Raghbendra Singh (2020) (LiveLaw report). Penal rent for retained company quarters adjusted against gratuity under SAIL's gratuity rules.
• Karnataka High Court, KSRTC v. Deputy Labour Commissioner (2011), reported 2012-III-LLJ-355. Deduction of a loan from gratuity held illegal under the Payment of Gratuity Act, 1972.
• ESIC circular of 11 December 2025. ESI wages follow section 2(88) of the Code on Social Security, 2020.
• Code on Social Security, 2020. India Code. Section 53(6) on forfeiture of gratuity.