With just 10 days to go for the start of the new financial year, the finance ministry on Friday notified the new income tax rules under the Income Tax Act, 2025. The Act and the rules are effective from this April.
“These rules may be called the Income-tax Rules, 2026. They shall come into force on the April 1, 2026,” a gazette notification said.
Now, electric vehicles will also be considered for perquisites taxation and fall within the concessional valuation slab for employer‑provided motor cars.
Amit Maheshwari, Managing Partner, AKM Global said that EVs are now treated at par with cars having engine capacity not exceeding 1.6 litre for the purpose of valuing perquisites when the vehicle is used partly for official duties and partly for personal purposes.
With this inclusion, the monthly taxable perquisite value for an EV used partly for official and partly for personal purposes will be Rs 5,000 per month (along with Rs 3,000 if a chauffeur is provided) where the employer bears the running and maintenance expenses. Alternatively, the taxable perquisite value will be Rs 2,000 per month (along with Rs 3,000 if chauffeur is provided) where the employee bears the cost of personal‑use running and maintenance.
“This amendment was necessary because earlier rules linked perquisite valuation solely to an engine‑ capacity threshold, an attribute irrelevant for electric vehicles. By formally adding EVs to the concessional slab, the government removes long‑standing ambiguity for employers and payroll teams,” he explained.
The rules will expand the scope of perquisite valuation and have brought them in sync with current expenditure trends. It has also expanded the category of cities available for 50% house rent allowance beyond the four metro cities to include Bengaluru, Hyderabad, Pune and Ahmedabad.
The income tax department had come out with the draft income tax rules on February 7 this year. Taxpayers had been awaiting the final rules to assess the tax impact on their salaries based on the changes in perquisite valuation.
While staying from any major changes in the tax structure, the new Income Tax Act, 2025 is a more concise and simpler version of the decades old Income Tax Act, 1961. It has also introduced simpler terms like the concept of a Tax Year, which will replace the confusing and differing terms of Financial Year and Assessment Year.
SureshKumar S, Partner, Deloitte India said the new rules should greatly help employers and employees given the recalibrated and realigned limits for various employee perquisites and exemptions. “While these are largely applicable for those on old regime, employees under new regime should also benefit,” he said, adding that most importantly, timely notification would be welcomed by employers from ease of implementation.
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