New income tax rules raise PAN threshold, meal allowances

New Delhi: The draft Income-tax Rules, 2026, released for public consultation before their implementation from 1 April, have raised the threshold for quoting permanent account number (PAN) for bank deposits to ₹10,00,000 in a year, up from the current ₹50,000 per day.

The tax-exempt limit on meal allowance has been increased to ₹200, up from ₹50.

Tax officials said that these rules will be finalized and notified in early march, but for the income earned in FY26, taxpayers have to use the existing forms when they file their returns.

The officials also said that the monetary threshold for some allowances given by employers to employees, including for children’s education and personal expense allowance, has been rationalised to take into account the current market realities.

“The rates have been rationalised taking into account market realities. Up to the revised level, the amount paid by the employer will not be counted as perquisites. It will be beneficial to the employees,” said one of the officials cited earlier, requesting not to be named. Income Tax Rule 15 gives the new applicable thresholds for various perquisites in tabular form and the applicable conditions.

The draft rules, released on Saturday for public feedback, are more concise, coherent and seek only relevant information from taxpayers, the officials said.

Experts pointed out that the rules rationalised thresholds for tax-free at-work meal value, gift received from employer and provision of free or concessional educational facility for any member of the employee’s household. They said the revised values represent a substantive recalibration of the tax treatment of employee benefits.

The Income Tax Rules, 2026 and the accompanying forms have been simplified to eliminate redundancies and seek only relevant, usable information, said this tax official.

Pre-filled forms will be offered to taxpayers, who can either edit or approve the information contained in the forms. This will make return filing easier, which will also ultimately lead to wider and deeper tax base, this official said. Process re-engineering has been done in order to cut down paperwork for more convenient return filing, said a second official, who also requested not to be named.

Rules and forms have been cut down by nearly half, this official said. It also includes Central Bank Digital Currency as an accepted mode of electronic payment, said this official.