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New Income Tax Rule: If you are employed, then there is good news for you. The tax burden is going to be reduced under the proposed New Income Tax Act 2026 of the Central Government. This simply means that the TDS deducted from your salary every month will reduce and the money in your hand will increase.

Let us know about those 5 big changes which are going to increase your salary.

5 big changes, which will increase take home salary

Income up to Rs 12 lakh now tax free (New Tax Regime)
The government has increased the scope of relief for those choosing the new tax regime. The rebate available under Section 87A has been increased to Rs 60,000. This will mean that now people with annual income up to Rs 12 lakh will not have to pay a single rupee tax. With this, middle income group people will save Rs 25,000 to Rs 50,000 annually.

Major change in HRA rules (for old tax regime)
A historic change has been made in the rules of HRA (House Rent Allowance) for those using the old tax regime. Now, along with Delhi, Mumbai, Kolkata and Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad have also been included in the category of metro cities. Employees living in these cities will now be able to claim HRA of 50% of their basic salary (which was earlier 40%). This will reduce taxable income significantly.

Bumper increase in children's education and hostel allowance
The decades old allowance limit has finally been increased in line with inflation. There is a proposal to increase the earlier amount of only Rs 100 per month to Rs 3000 per month (per child). Hostel Allowance is being directly increased from Rs 300 per month to Rs 9000 per month. There can be a difference of more than Rs 50,000 annually in tax savings of employees whose children are studying.

Standard Deduction
The benefit of standard deduction for salaried employees will continue in both the regimes. There is talk that it can be increased from the current Rs 75,000 to Rs 100,000, which will directly reduce your taxable income by another Rs 25,000.

Gifts received from office are now tax free up to Rs 15000
Till now, gift vouchers of more than Rs 5000 received from the company were under the ambit of tax. In the new draft rules, this limit has been increased to Rs 15,000. This means that now you will have less worry about tax on Diwali bonus or rewards.

What will be the effect on your salary?
According to experts, due to these changes, the annual take-home salary of an average salaried employee may increase by Rs 25,000 to Rs 80,000. However, this will depend on which tax regime you choose and what is your salary structure.