The Major Shifts: Old Limits vs. New 2026 Rules
The 2026 framework provides substantial relief to salaried employees, particularly those utilizing itemized structures. The table below outlines the key allowance and perquisite changes.
Designated Partner: Rakesh Baid
Published 28 June 2026
| Benefit / Allowance | Historical Limit | New Limit (2026 Rules) | Practical Strategic Impact |
| Children Education Allowance | ₹100 / month / child | ₹3,000 / month / child | Major tax-free component boost for families (up to 2 children). |
| Hostel Expenditure Allowance | ₹300 / month / child | ₹9,000 / month / child | Significant realistic relief for employees with children in hostels. |
| Meal Vouchers / Food Cards | ₹50 / meal | ₹200 / meal | Annual tax-free meal benefit potential increases up to ₹1,05,600. |
| Festival Gifts & Vouchers | ₹5,000 / year | ₹15,000 / year | Higher corporate gifting capacity without triggering perquisite taxes. |
| Interest-Free Employee Loans | ₹20,000 principal | ₹2,00,000 principal | Small medical or emergency company loans are now completely tax-free. |
| HRA Metro Status Expansion | 4 Traditional Metros | 8 Cities Total | Bengaluru, Hyderabad, Pune, and Ahmedabad now qualify for 50% HRA exemption. |