What is the new meal card exemption under the draft rules?

The draft proposes an employer-provided meal exemption of Rs 200 per meal, capped at Rs 1.05 lakh per financial year. If notified, this allowance would be tax-free within limits and recorded as a perquisite in payroll. Usage rules and acceptable merchants will be finalized in the government’s notification.

When will the draft income tax rules take effect?

The proposal targets an April 1, 2026 rollout, but it is not law yet. The government must notify the final income tax rules and clarify thresholds, definitions, and documentation. Employers and platforms can start readiness work now, while employees should wait for final confirmation before changing declarations.

Do the PAN rule changes remove PAN for all transactions?

No. The draft suggests easing PAN needs for routine, low-risk payments, not for all transactions. High-value dealings and regulated activities will continue to require PAN and full KYC. Detailed thresholds and exceptions will be set out in the final income tax notification and regulator circulars.

Are HRA exemption cities changing in 2026?

The draft signals clarifications on perquisites, and many are asking about metro versus non-metro treatment. However, the government has not confirmed any changes to HRA exemption cities. Watch the final notified rules to see if city lists or calculation methods are updated for FY 2026-27.

How much tax can a salaried person save with the meal exemption?

If the full Rs 1.05 lakh limit is used, someone in the 30% slab plus 4% cess may save about Rs 33,000 in income tax. Actual savings vary by slab, regime choice, and salary structure. Check your payroll mix and simulate both regimes before revising declarations.

Global Market Insights

India Income Tax February 13: Draft 2026 Rules Lift Meal Exemption, Ease PAN

ByHuzaifa Zahoor February 13, 2026February 13, 2026

India’s draft Income-tax Rules, 2026 put income tax changes on the table for salaried workers and financial firms. The proposal lifts tax-free employer-provided meal benefits to Rs 200 per meal, up to Rs 1.05 lakh a year, and eases PAN use for routine transactions while tightening insurance reporting. If notified from April 1, 2026, take-home pay may increase in urban centers, and compliance workflows across banks, insurers, and meal-card providers will shift. We break down what this could mean for paychecks, policies, and portfolios.