New Delhi | A major change is coming to income tax rules for salaried employees. The Central Board of Direct Taxes (CBDT) has officially notified the “Income Tax Rules, 2026,” which will come into effect from April 1, 2026. Under the new rules, not only will an employee’s basic salary be taxable, but the value of all company-provided benefits (perquisites) will also be included in taxable income. The aim is to make the valuation of benefits received by employees more transparent and straightforward.
https://the420.in/future-crime-summit-2026-speaker-applications-new-delhi-fcrf/
Living in a Company-Provided House? Here’s the New Rent Calculation
According to the new rules, if an employee is provided with residential accommodation by the company, the taxable value will depend on the city of residence. The 2011 census data has been used as the basis for this classification.
Metropolitan Cities: Cities with a population exceeding 4 million will have the house valued at 10% of the employee’s salary.
Mid-Sized Cities: Cities with populations between 1.5 million and 4 million will have a valuation of 7.5% of salary.
Smaller Towns/Areas: Cities with smaller populations will have the valuation fixed at 5% of salary.
If the company rents the house instead of owning it, tax will be levied on the lesser of actual rent or the percentage of salary as specified above. If the house comes furnished, 10% of the furniture value or actual rent will be added to taxable income. For government employees, the calculation will be based on the license fee determined by the government.
Office Cars and Domestic Staff Now Taxable
- The taxable value of a company-provided car will be determined by its engine capacity (CC).
- Small Cars (1.6 liters or electric): ₹5,000 per month; an additional ₹3,000 for a driver.
- Large Cars (over 1.6 liters): ₹7,000 per month; an additional ₹3,000 for a driver.
If the company provides domestic staff such as gardeners, security guards, or housekeeping personnel, their salaries will be treated as part of the employee’s income. Any contributions made by the employee toward these services will be deducted from the total value.
Similar rules will apply to utilities such as electricity, water, and gas. If the company pays bills to an external agency, the actual amount will be added to the employee’s taxable income. If the company provides these services using its own resources, such as a power plant or water pump, tax will be calculated based on the manufacturing cost of the service.
Relief on Children’s Education, Gifts, and Loans
The new rules also provide some relief. Company expenses on children’s education up to ₹3,000 per month per child will be tax-free. Additionally, corporate gifts and vouchers up to ₹15,000 annually will not be taxable. Food vouchers given during working hours up to ₹200 per mile will also remain tax-free.
Loans up to ₹2 lakh taken from the company or for critical medical treatment will be exempt from tax. Interest on any amount exceeding this will be calculated based on the SBI rate prevailing on the first day of that financial year.
These new rules aim to increase transparency for employees and clearly define perquisite-based income. Experts recommend that employees review their salary structure and tax planning in light of these changes to avoid unexpected tax liabilities.
About the author — Suvedita Nath is a science student with a growing interest in cybercrime and digital safety. She writes on online activity, cyber threats, and technology-driven risks. Her work focuses on clarity, accuracy, and public awareness.
