New Income Tax Rules 2026: Raised Limits On Deposits & Employee Perks

The government has rolled out the new draft of the income tax rules 2026. It has now been released for feedback, and once the final draft is approved, the rules will take effect on 1st April 2026. The new rules have introduced some of the most significant updates in years. Some of the key changes include higher reporting limits on cash deposits and property deals, as well as larger tax-free perks for employees. It means meal vouchers and gift limits for salaried employees have increased, aiming to simplify compliance while giving relief to taxpayers. Many other changes in the new Income Tax have been made after a long time. At the same time, choices between the old regime with exemptions and the new regime with lower rates have been introduced. It will continue to shape how salaries are taxed. In this blog, we’ll break down the new rules, compare their impact on salaries, and highlight the transaction reporting changes. At the same time, it explains what these changes mean for everyday taxpayers.

Key Takeaways For Salaried Personnel: Old vs New Regime

One of the biggest changes made after the budget session impacts the salaried employees, creating confusion among individuals about whether to stick with the old regime or move to the new regime. The old regime provided benefits such as exemption from House Rent Allowance (HRA), children’s education, hostel allowance, and meal vouchers. The new regime offers lower tax rates and a higher standard deduction, but fewer exemptions. To understand it better, here’s a comparison of how much tax you might pay at different salary levels. The table shows that the old regime saves more for families with an allowance, while the new regime is cheaper for those who claim few exemptions.

Major Pan & Transaction Changes As Per New Income Tax Rules

After the Rajya Sabha meeting on the Income Tax Act, not just salaried professionals are affected. The new rules also apply to day-to-day transactions. These new rules indicate that the reports are required to be submitted to the Income Tax Department about any activity above a certain amount. These changes affect cash deposits, withdrawals, property deals, vehicle purchases, and even hostel or event payments. The goal of these rules is to reduce unnecessary reporting for small transactions while tightening checks on annual totals. Here are the five most important updates you should know:

1. Cash Withdrawals & Deposits

Previously, cash deposits exceeding 50,000 in a single day required a PAN when made at a bank/post office. Under the new rule, the cash deposit limit has increased to Rs. 10 lakh per financial year across all bank accounts. Furthermore, the same threshold applies to cash withdrawals (up to Rs. 10 lakh per financial year).

2. Vehicle Purchase

The new rules propose that a PAN is required for the purchase of a motor vehicle or motorcycle. When the value exceeds Rs 5 lakh, unlike the existing rule, which requires a PAN on all purchases of motor vehicles (excluding motorcycles).

3. Events & Hotel Bills

As of now, PAN is required for payments at hotels, restaurants, and events when the amount exceeds 50,000. However, under the new rules, the limits have increased, and now payments above Rs 1 lakh require a PAN.

4. Immovable Property Transactions

Under our current rules, a PAN is required for immovable property. For any transaction of Rs 10 lakh, whether it’s a sale or joint development. Under the new rules, the PAN requirement limit for such matters will be increased to Rs 20 lakh.

5. Changes to the Insurance Policy

Current rules demand PAN only in the insurance policies where the premium in a year is more than Rs 50,000. However, the new draft changes the rule, so the PAN is now mandatory when opening an insurance account.

Old vs New Regime: Changes to Transaction Reporting Rules

While the PAN and transaction changes have shown a quick snapshot of what’s new, the compliance rules go deeper into how banks, post offices, and taxpayers must report each transaction. The focus has shifted from small daily limits to big yearly totals, making the system easier for high-value activities. The changes flagged what needed to be reported to the Income Tax Department. Here’s a simplified table below that shows the changes exactly.

Employees’ Perks & Government Clarification

The meeting of Nirmala Sitharaman, our Finance Minister, in the Rajya Sabha has introduced the new Income Tax Act with significant changes. One of the major takeaways from it was the reaction to the budget and the middle-class situation. She addresses concerns and replies to opposition accusations. She states that the rise in personal income tax collections does not mean the middle class is being suppressed. Further emphasizes that the new rules are designed to ease compliance and provide relief, not to burden the salaried taxpayers. Employees’ benefits if the new rules are imposed include:

• Meal Vouchers: Tax-free limit increased from ₹50 per meal to ₹200 per meal.
• Gifts: Annual tax-free gifts limit raised from ₹5000 to ₹15000.
• Mobility Perks: Higher exemption for fuel, driver salary, and company car allowances.

These changes can help employees save more tax through everyday benefits, especially when the company provides meal cards or allowances.

Final Words

The new income tax rules 2026 aim to simplify the system of taxation while imposing stricter monitoring of large transactions. With this implementation, employees’ benefits will improve, as many beneficial rules have been introduced. While it may be that families prefer the old regime, compliance reporting now focuses more on large annual totals. This is a draft released for stakeholder feedback, with the last date for feedback on 22nd February. Once the feedback is submitted, the final rules will take effect from 1st April 2026, following the suggested changes. Taxpayers should review both regimes and decide for themselves which suits them best based on their lifestyle and spending patterns. For more such informative and recent updates, tune in to Organs Beauty’s page.

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