New Delhi (India) February 13:The Draft Income Tax Rules 2026 released by the Income Tax Department once approved will take effect from FY 2026-27. The draft income tax rules were created under the new Income Tax Act 2025, which will take effect on April 1, 2026.
The government will receive suggestions on the draft rules until 22 February 2026, after which the final rules will be notified for implementation. 

HRA and Allowances Get Boosts

For salaried and middle income taxpayers, a range of changes have been proposed. These draft rules would make notable changes to the limits and reach of popular exemptions like house rent allowance, children education allowance, hostel allowance etc, which hadn’t been revisited for decades. And the requirement to quote PAN cards in relation to several transactions is being revised. 

PAN Mandatory Only for Rs 10L Cash Moves

The draft Income Tax Rules 2026 also provide that certain transactions in which the PAN Card number needs quoting are adjusted.
As per the new rules, for Rs 10 lakh cash deposit in a financial year, PAN Card will be required. Likewise, cash withdrawal from a bank or post office for a value of over Rs 10 lakh in a financial year will require a PAN Card, with an approval for the draft rules. 

Hotels, Events: PAN from Rs 1 Lakh Up

Hotel rooms, banquet halls and event venues may also become less limited when it comes to spending with PAN, which will need to be reported only for payments over Rs 1 lakh – double the existing limit.
There could be relief to be had in car manufacture too. The majority of automobile buyers are requiring PAN at present, but with the new version it will only apply to transactions above Rs 5 lakh, which looks encouraging to younger petrol and diesel vehicle purchasers. 

The requirement for quoting PAN in property transactions may be increased in the real estate market to Rs 20 lakh, rather than Rs 10 lakh, and it would help ease compliance for the smaller transactions as well. 

Meal Vouchers: Rs 200/Meal, Save Rs 1L+

The draft Income-tax Rules, 2026 put forward very important relief for salaried staff who receive subsidised meals through business canteens or meal vouchers like Sodexo (Pluxee) and Zaggle.
The former Income Tax Act allowed exemption up to Rs 50 per meal. If on account of this scheme, an employer provided two meals each worth Rs 50 each (total amount of Rs 100) it was not taxed. Now the draft rules, however, suggest increasing such a limit on each meal to Rs 200. It could be up to Rs 1,05,600 per year for employees, if it is approved by Parliament.