Perks to loans: What changes for salaried employees from April
What's the story
Starting April 1, 2026, salaried employees in India will witness major changes in their corporate perks. The alterations are part of the new Income Tax Act, 2025, and were announced by the government earlier this month. CA Nitin Kaushik took to social media platform X to explain how these changes could affect take-home salaries.
Tax impact
CA warns take-home cuts
Kaushik warned that office perks are set for a major overhaul, which could significantly reduce take-home pay by 2026. He said the government is aggressively recalibrating the value of non-monetary benefits under the new rules. This means items previously considered "free" may soon come with a much higher tax burden. The changes will apply to both old and new tax regimes as they relate to the valuation of perquisites linked to salaried income.
Car tax
Monthly car perquisite now ₹5,000
The new rules have raised the monthly valuation of company car perquisites (motor cars), resulting in a higher tax outgo. For instance, if your company provides a car with an engine capacity of up to 1.6-liter for both official and personal use, the taxable value has been hiked from ₹1,800 to ₹5,000. This is a ₹3,200 increase that could significantly impact senior executives' taxable income annually.
Tax benefits
Loan limit increased to ₹2 lakh
On a positive note, the new rules also increase the tax-free limit for interest-free loans from employers. The limit has been raised from ₹20,000 to ₹2 lakh, a major relief for employees seeking small personal or emergency advances. Similarly, the tax-free limit for meal vouchers has been increased fourfold from ₹50 to ₹200 per meal. This could provide a potential tax-free benefit of over ₹1.05 lakh per year if two meals are provided daily.
Gift tax
Annual cap for gifts and vouchers
The annual cap for the gifts and vouchers has also been raised from ₹5,000 to ₹15,000. This change finally takes inflation into account over the past decade. Kaushik said these changes are forcing a choice between a lean, cash-heavy salary or paying the full market price for corporate lifestyle perks.