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- New Income Tax Rules 2026: 10 Big Changes In Perks & Salary Tax From April 2026
New Delhi10 minutes ago
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The central government is going to implement a new income tax system in the country from April 1, 2026. This new law will replace the existing Income Tax Act 1961. According to the draft Income Tax Rules 2026, the methods of tax calculation for middle class taxpayers, private sector employees and big business houses will completely change.
These draft rules were put up for public suggestions till 22 February 2026. The purpose of the new rules is to create a fixed formula to determine the value of the facilities provided along with salary such as company house, car and gifts, so that there is transparency in tax assessment i.e. calculation.
10 big changes that will impact your pocket…
1. The new law will be effective from FY 2026-27
The Income-Tax Rules 2026 will officially come into effect from April 1, 2026. This means that these rules will be applicable to income for financial year 2026-27 and tax returns for assessment year 2027-28.
This new Income Tax Act has been brought to support 2025. In which the process of tax calculation has been made more simple.
2. Tax on contribution more than ₹ 7.5 lakh in retirement fund
If your company deposits more than ₹ 7.5 lakh in your PF, NPS and superannuation fund in a year, then it will now be taxed.
A special formula has been provided in the draft rules, whereby contributions above the limit of ₹ 7.5 lakh and the returns (interest/dividends) received on it will be considered as ‘taxable benefits’.
3. The value of the company’s accommodation will be fixed
The tax value of the accommodation i.e. house given to private sector employees will now be decided on the basis of the population of the city…
- Population more than 40 lakh: 10% of the salary will be considered as taxable value.
- Population of 15 to 40 lakh: 7.5% of the salary will be considered as taxable value.
- Other cities: 5% of salary. If the employee himself is paying some rent, the same will be deducted from this value.
4. Different rules for houses taken on lease
If the company itself rents the house and gives it to the employee, then the rules will be different. In this case, the actual rent paid by the company or 10% of the employee’s salary, whichever is lower, will be considered as taxable value. This rule will be applicable to lease rental in metro cities.
5. Using office car will now be expensive
Fixed monthly tax value has been fixed for using the office vehicle for both personal and official purposes.
- Up to 1.6 liter engine: ₹5,000 per month.
- Engines larger than 1.6 litres: ₹7,000 per month.
- Driver Features: ₹3,000 per month additional.
Tax will be calculated by adding these fixed values with salary income.
6. Limit of gifts on festivals is ₹ 15,000
Gifts, vouchers or tokens received from companies will now be tax-free only up to a total of ₹ 15,000 in a year. If the value of gifts exceeds ₹ 15,000 in the entire year, then tax will have to be paid on the entire amount. Till now this limit was quite low.
7. Office meals up to ₹200 tax-free
There will be no tax on food or non-alcoholic beverages served during working hours, provided its value does not exceed ₹200 per meal. This includes office canteens, meal coupons and corporate meal programs.
8. Tax on loan taken from employer
If the company gives loan without interest or at low interest, then that profit will be taxable. Tax will be calculated on the basis of SBI interest rate. There will be no tax on loans up to ₹2 lakh or loans taken for the treatment of serious illness.
9. Rules on expenses related to tax-free income
If you earn income which is not taxed, then there is a new formula to claim the expenses related to it. 1% of the average annual value of investments will be considered as expense, but this amount cannot exceed the total expenses claimed by you.
10. Limit of ₹ 2 crore on foreign digital business
A limit of ‘Significant Economic Presence’ has been set for foreign companies doing digital business. If a company’s revenue in India is more than ₹2 crore or it has more than 3 lakh Indian users, then it will have to pay tax in India.
What are ‘Perks’?
Apart from salary, the facilities provided by the company are called perks. Like a free car, house, club membership or servants. The Income Tax Department also considers these as your ‘earnings’ and calculates their value and collects tax on it.
Impact on Form 16 and salary slip
According to tax experts, these changes can have a direct impact on your ‘take home’ salary. Companies will have to update their salary structure and software so that the new values can be reflected in Form 16 and salary slips.
What should taxpayers do?
Review salary components (such as car, home and retirement fund) with your employer before the new rules come into effect to manage tax liability.
Read this news also…
Draft of new income tax rules released: Number of rules reduced from 511 to 333; The new system will be implemented from April 1, 2026
The Income Tax Department on Saturday released the new draft of ‘Income Tax Rules, 2026’. These new rules will be effective from the next financial year i.e. 1 April 2026. The aim of the government is to simplify the process of tax filing and make the rules easier for common tax payers.
The number of rules and forms has also been reduced in the new proposed draft. There were a total of 511 rules and 399 forms in the ‘Income Tax Rules, 1962’ implemented till now. In the new draft, these have been reduced to only 333 rules and 190 forms. Read the full news…
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