Shishir

Draft Tax Rules: Big Rise in Employee Perk Values The Indian government has released draft Income Tax rules for 2026. These rules propose a sharp increase in the value of employee perquisites. Perquisites are extra job benefits like company cars, free meals, or gifts that count as part of your taxable salary. Key changes include: • Company Cars: If your employer provides a car for mixed use (work and personal), the monthly value jumps to Rs 5,000 (for small engines up to 1.6L) or Rs 7,000 (for larger engines), plus Rs 3,000 for a driver. This is almost triple the old rates of Rs 1,800-2,400 plus Rs 900 for driver. • Free Meals: Tax-free limit per meal rises to Rs 200 from Rs 50, helping with office canteen costs. • Gifts: You can now get up to Rs 15,000 worth of gifts from your employer tax-free each year, up from Rs 5,000. • Other Perks: Rules also update values for housing, loans, and club memberships to match today’s costs. This hike means employees might pay more tax on these benefits, as higher values add to taxable income. But some limits, like for gifts and meals, are more generous. Employers may need to adjust packages. The rules aim to simplify taxes and update old limits. Public feedback is open until February 22, 2026. If passed, they start from April 1, 2026.