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Key Changes under the Income tax Rules, 2026
On 20 March 2026, the Central Board of Direct Taxes (CBDT) notified the Income tax Rules, 2026 (New Rules) to operationalize the provisions of the Income tax Act, 2025, effective from tax year 2026–27. This alert summarizes the key changes introduced by the New Rules that impact salaried individuals, such as the replacement of prescribed forms for foreign tax credit and salary related claims; expansion of the list of cities eligible for higher House Rent Allowance (HRA) exemption; enhancement of exemption limits for specified allowances; and revisions to the valuation of perquisites relating to food benefits, gifts, and motor cars.
These key changes are effective from 1 April 2026 and necessitate immediate action by employers, payroll teams and employees.