Starting April 1, 2026, new income tax rules will come into force, bringing several changes that directly impact salaried employees. The updated provisions aim to modernise the tax system, revise employee benefits and improve transparency in tax reporting.
One of the key changes relates to House Rent Allowance (HRA). The government has expanded the list of cities eligible for higher HRA exemption. Employees living in cities such as Bengaluru, Hyderabad, Pune and Ahmedabad can now claim up to 50% of their salary as exempt under HRA, compared to 40% for other locations. However, this benefit remains applicable only under the old tax regime, meaning those opting for the new regime will not be able to claim it.
Meal-related benefits have also been revised. Salaried individuals receiving meal vouchers, cards or coupons can continue to enjoy tax exemptions on these perks, with a standard limit of ₹200 per meal. A significant change is that this benefit will now also be allowed under the new tax regime, making it more attractive for employees who previously missed out on such exemptions.
The rules further update how perquisites, or employee benefits, are valued. This includes employer-provided facilities such as company cars, concessional loans and other allowances. The revised valuation method is designed to better reflect current market conditions, ensuring a more accurate calculation of taxable income.
Additionally, the new framework introduces stricter disclosure requirements. For example, employees claiming HRA may need to provide details about their landlord, including whether there is any relationship. This step is intended to reduce misuse of exemptions and improve compliance.
Also Read: Spire Global sends 10 satellites into orbit