New Delhi, February 13: The Central Board of Direct Taxes (CBDT) has released the draft of the Income Tax Rules 2026, which proposes increased tax exemptions for residents of Bengaluru, Hyderabad, Pune, and Ahmedabad. Under the new rules, the number of cities eligible for a 50% House Rent Allowance (HRA) exemption for salaried individuals opting for the old tax regime has been expanded.
Currently, only employees working in Delhi, Mumbai, Kolkata, and Chennai benefit from the 50% HRA exemption, while other cities have a limit of 40%. The draft includes Bengaluru, Hyderabad, Pune, and Ahmedabad in this list, allowing salaried individuals in these cities to also avail of the 50% HRA exemption.
Additionally, the draft proposes an increase in the deemed taxable value for cars partially provided by employers for personal use. The new rates suggest ₹8,000 per month for cars with an engine capacity of 1.6 liters and ₹10,000 for higher capacity cars, up from the current limits of ₹2,700 and ₹3,300 respectively.
Moreover, the draft proposes to quadruple the tax-free meal limit provided by employers to ₹200 per meal. The annual exemption for gifts from employers is also set to increase from ₹5,000 to ₹15,000. Furthermore, the scope of tax-free employee loans is proposed to expand, raising the exemption limit from ₹20,000 to ₹2 lakh.
Deependra Singh Chundawat is a Senior Sub-Editor at Udaipur Kiran, specializing in a wide range of technology topics including mobile phones, applications, gaming, PCs, and wearables. Along with covering the latest tech news, he also creates engaging web stories. Passionate about emerging technologies, he stays up to date with the newest trends and enjoys reading and writing about the latest mobile launches and digital innovations.
