31/03/2026
What changes for salaried employees and senior citizens from 1st April 2026?
1. Higher allowances for education, HRA and more:
If an employer provides free food vouchers, up to ₹200 per meal will be tax free. This means ₹4,400 per month for 22 working days, or up to ₹8,800 if two meals per day are provided.
Education allowance for up to two children will be increased from ₹100 per month to ₹3,000 per month.
Hostel allowance for up to two children will be increased to ₹9,000 per month.
Cities such as Bengaluru, Hyderabad, Pune and Ahmedabad will now be treated at par with metro cities like Mumbai, Kolkata, Delhi and Chennai. Employees in these cities will get 50% HRA exemption. Cities like Noida, Gurugram and Navi Mumbai will remain in the 40% category.
Employees claiming HRA and other deductions must now provide detailed disclosures through a separate form, including landlord details. PAN of the landlord is mandatory if annual rent exceeds ₹1 lakh.
2. New forms for TDS Certificates:
For salaried taxpayers, the most visible change will be in salary structure, TDS calculations, and documentation.
The traditional Form 16 will be replaced by Form 130, a more detailed statement capturing salary income, tax deducted, and deductions claimed. In addition, a new Form 123 will record perquisites and fringe benefits.
3. Senior citizens:
For senior citizens, the reforms focus on simplification and consolidation of processes.
A key update is the introduction of Form 121, which merges the existing Forms 15G and 15H into a single unified declaration for interest income. The system will automatically identify whether the filer is a senior citizen and apply the relevant provisions, reducing procedural complexity.
