Mumbai, March 27: The Central Board of Direct Taxes has rolled out the Income Tax Rules, 2026, introducing wide-ranging reforms effective April 1. Aligned with the Income-tax Act, 2025, these changes aim to simplify compliance, reduce paperwork, and promote the new tax regime. However, the short transition window has raised concerns among taxpayers and businesses.

Higher Thresholds for PAN Disclosure

The new rules significantly ease PAN requirements for high-value transactions. PAN will now be required only when cash deposits or withdrawals exceed INR 10 lakh in a financial year, replacing the earlier daily threshold of INR 50,000. Property transactions will need PAN only above INR 20 lakh, up from INR 10 lakh. For motor vehicle purchases, the limit is now INR 5 lakh, while hospitality expenses such as hotel or event bills require PAN only if they exceed INR 1 lakh. Income Tax Rules 2026 Notified: What Salaried Employees Need To Know.

Relief for Salaried Employees

Salaried individuals will benefit from revised allowances that have remained unchanged for years. The children’s education allowance has increased from INR 100 per month to INR 3,000 per month for up to two children. Hostel allowance has also been raised sharply from INR 300 to INR 9,000 per month. Additionally, more cities including Bengaluru, Hyderabad, Pune, and Ahmedabad are now eligible for the higher 50 percent House Rent Allowance (HRA) exemption. India to Implement New Income Tax Rules From April 1: What Taxpayers Need to Know.

New Tax Regime Gets Attractive Additions

The government has added new incentives to make the new tax regime more appealing. Employees can now claim tax-exempt meal vouchers worth up to INR 200 per meal, which can total around INR 8,800 per month. Electric vehicles provided by employers will also attract lower tax valuation, aligning them with small petrol and diesel vehicles and encouraging eco-friendly commuting.

Stricter Compliance and Digital Tracking

While thresholds have increased, compliance has become stricter. Salaried taxpayers must now submit proof for claims like HRA through the newly introduced Form 124 during the TDS process. Insurance reporting has also tightened, with insurers required to report premiums exceeding INR 5 lakh annually. This data will reflect in the Annual Information Statement (AIS), improving transparency.

Transition Challenges for Businesses

Despite simplification efforts, the quick rollout has created operational challenges. With limited time between notification and implementation, companies may struggle to update payroll systems and adjust TDS calculations. Experts believe that while the new regime is becoming the default choice for many, taxpayers should evaluate their income structure carefully before switching.

Overall, the Income Tax Rules, 2026 mark a shift toward a cleaner, more digital tax system, balancing ease of compliance with tighter monitoring.

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(The above story first appeared on LatestLY on Mar 27, 2026 02:18 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).