Income Tax News: On April 1, the new Income Tax Act 2025 would come into effect. The Act would impact salaried employees, especially those under the old tax regime. Under the new rules, higher House Rent Allowance (HRA) exemptions would be offered to residents of Ahmedabad, Bengaluru, Hyderabad and Pune apart from Delhi, Chennai, Mumbai and Kolkata.
Income Tax News-What Has Changed?
Under the new Act, the exemption limit for free non-alcoholic beverages and food provided to employees by the employer (i.e. corporate meal cards like Sodexo and Pluxee) has been increased from Rs. 50 to Rs. 200. Moreover, exemptions for corporate gift certificates, cards and coupons have been increased up to Rs. 15000 each year.
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The Union Government has also announced that corporate loans with interest rates below the market rate or no interest would now be taxed, depending on the difference between the actual rate charged and the lending rate of the State Bank of India. On the other hand, corporate loans that are less than Rs. 2 lakh or those taken for medical emergencies would stay tax-free.
An increase in taxes for using corporate vehicles for personal and official activities has been imposed to the tune of Rs. 8000 a month on cars with engines up to 1.6 litres and Rs. 10000 a month for bigger vehicles.
PF withdrawals would not be fully taxable and they would go tax-free if employees work for a period of 5 years or more in the same company.
Impact On Your In-Hand Salary
Companies would now have to pay a minimum of 50 percent of an employee’s salary as the basic wage component. This means that contributions to provident fund would increase but your in-hand salary would decrease. Moreover, the new labour code would include “supplementary allowance”, “special allowance” or “flexible benefit” under wages.
