Now only a few days are left for the new financial year (2026-27) to start. From April 1, 2026, not only the calendar will change, but the mathematics of your salary is also going to change. New provisions of the Income Tax Act, 2025 are going to come into effect, which can directly affect your salary structure and take-home salary.
Income tax experts say that even if your company does not increase your total package (CTC), the allowances and deductions appearing in your pay slip may change from April 1. Let us understand what effect the new rules will have on your pocket.
Why will there be change in salary structure?
Under the new rules, the government has tightened the rules for evaluating allowances, reimbursements and facilities provided by the company. Earlier, companies used to divide the salary into many different allowances to save tax, but now a fixed taxable value of most of the benefits has been defined. This means that a larger portion of your salary can now be considered taxable income.
In-hand salary may reduce
According to the new labor code implemented in the country, now it is mandatory for the basic salary of any employee to be at least 50% of his total CTC. By increasing the basic salary, your contribution to PF and gratuity will increase. At the same time, your savings for the future will increase, but the salary you receive every month may decrease.
Company facilities will now be taxable
If your company provides you some special facilities, now you will have to pay tax on them. Personal use of the office car and driver’s salary will now be added to your taxable income. At the same time, payment for house, servant, or electricity-water bill received from the company will also now come under the ambit of tax. Facilities like children’s school fees (above the prescribed limit), company credit card, club membership and paid holidays will now be clearly taxed.
Old vs New Tax System
From April 1, it will become even more important to decide which tax system is better for you. Tax rates are lower in the new tax regime, but exemptions like HRA and 80C are not available. If your salary structure is simple, then it is better. However, if your salary in the old tax regime includes many allowances and you make investments (LIC, PPF etc.), then the old regime can still be helpful in saving tax.