Income Tax New Rules 2026: Will Your In-Hand Salary Increase or Fall from April 1? – Full Impact on Salaried Employees Explained

Income Tax New Rules 2026: The new Income Tax Act will come into effect from April 1, 2026, along with the start of the new financial year 2026-27. These changes are expected to affect salaried employees, especially those who follow the old tax regime. 

Under the new rules, the government has increased exemptions and benefits. Four more cities have been added for higher benefits, and allowances for children’s education, hostel expenses, meal cards, gift vouchers, and travel has also been increased. 

Income Tax New Rules 2026: Will Your In-Hand Salary Increase? 

There will be no change in income tax slabs from April 1. This is because the government did not announce any changes in tax rates in Budget 2026 for both the old and new tax regimes. 

Later, even in the official notifications of the Income Tax Act 2025 and Income Tax Rules 2026, there was no update about any change in the tax slabs. 

How Income Tax New Rules 2026 Will Impact Your Salary? 

The allowance for children’s education has been increased from Rs 100 to Rs 3000 per month for each child. The hostel allowance has also gone up from Rs 300 to Rs 9000 per month per child.

The HRA rules have been updated. Now cities like Ahmedabad, Bengaluru, Hyderabad, and Pune are included in the higher benefit category, where you can claim up to 50% exemption instead of 40%. Earlier, this benefit was only for cities like Chennai, Delhi, Kolkata, and Mumbai. 

The limit for tax-free food and drinks provided by companies such as meal cards, has been increased from Rs 50 to Rs 200 per meal.

The tax-free limit for gift cards or vouchers given by companies has been increased to Rs 15000 per year.

For employees working in transport services, the allowance exemption has been increased from Rs 10000 to Rs 25000 per month. 

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