The Central Board of Direct Taxes (CBDT) has shared the draft income tax rules 2026, and the proposed changes could be a major win for salaried employees. For those earning between ₹15 lakh and ₹25 lakh, the choice between tax regimes is about to change. By increasing the limits for tax-exempt allowances, the government is making the Old Tax Regime much more rewarding.
If you have an active udyam registration or run a small firm, these changes also impact how you structure payroll. A better tax structure for employees helps in staff retention. For many, a lower tax bill means better cash flow, which is helpful if you are planning to apply for a business loan.
Higher Allowance Limits: A Direct Boost to Savings
The most striking part of the draft income tax rules 2026 is the jump in allowance limits. These limits have stayed the same for years, making them lose value due to inflation. The new rules fix this by offering much higher deductions.
With these higher limits, someone with two children in a hostel could see an annual deduction of over ₹2.8 lakh from these two items alone. This makes the lowest lap interest rates in west bengal 2026 and other financial planning more effective as your net take-home pay increases.
HRA Expansion: 50% Exemption in 8 Cities
Currently, only Delhi, Mumbai, Kolkata, and Chennai get a 50% HRA exemption. All other cities are capped at 40%. The draft income tax rules 2026 propose adding four new cities to the 50% list:
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Bengaluru
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Hyderabad
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Pune
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Ahmedabad
For employees in these IT and business hubs, this change will lead to significant tax savings. Higher tax savings can improve your cibil score for business loan by allowing you to manage your debts more comfortably.
Impact on the ₹15 Lakh to ₹25 Lakh Salary Bracket
According to reports in the Economic Times, the Old Tax Regime will now be much more useful for mid-to-high earners. In the current system, the New Tax Regime is often the default choice. However, with the new HRA rules and the massive hike in education allowances, the Old Regime allows for much larger deductions.
If you are a professional using a loan against property for your office, you already know the value of deductions. These tax changes work in a similar way by lowering your taxable income. A lower business loan interest rate and lower taxes together can help you scale your operations faster.
Form Changes and the “Tax Year” Concept
The draft income tax rules 2026 also focus on making the process simpler. The CBDT wants to reduce the number of rules and forms.
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Form 130: This will replace the current Form 16.
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Form 168: This will replace Form 26AS and AIS, acting as a “Tax Passbook.”
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Tax Year: The terms “Previous Year” and “Assessment Year” will be replaced by a single “Tax Year.” For example, the period starting April 2026 will simply be called Tax Year 2026–27.
These changes make it easier for people to understand their tax status. If you are applying for a working capital loan, having clear and simple tax records is a huge advantage. Banks can review your data faster, leading to quicker gst loan approvals.
Using Tax Savings for Financial Growth
A lower tax burden means more money in your bank account. You can use this surplus to improve cibil score by paying off high-interest debt. It also makes you more eligible for a business loan upto 1 crore.
When you save on taxes, you can also look at the tax benefits of loan against property to see how secured debt can further lower your tax liabilities. This is a common strategy for business owners in Kolkata to grow their wealth while staying compliant.
CBDT Feedback Window: Why You Should Act Now
The CBDT has kept the feedback window open until February 22, 2026. This is a chance for taxpayers to voice their opinions. Professionals should check the mortgage loan eligibility documents and tax formats to see if they need more clarity on the new forms.
Staying updated with these changes is part of a smart business plan. Whether you want to utilise the loan against property or explore cash credit options, knowing your tax outflow is the first step.
Frequently Asked Questions (FAQs) – Draft Income Tax Rules 2026
1. Will the new allowance limits apply to the New Tax Regime?
Most of these allowances, like the Children Education Allowance and HRA, are only available under the Old Tax Regime. The New Tax Regime offers a lower rate but removes these specific deductions.
2. When will the draft income tax rules 2026 be finalized?
The CBDT is currently taking feedback. Once the feedback window closes on February 22, the final rules are expected to be notified before the start of the new tax year in April 2026.
3. How does the HRA change help people in Bengaluru or Pune?
Under the draft income tax rules 2026, residents of these cities can claim 50% of their salary as exempt HRA (provided they pay that much rent), compared to the 40% limit in the current rules.
4. Is the standard deduction still available?
Yes, the standard deduction is expected to remain part of both regimes, but the Old Regime will now be more competitive due to the other increased allowance limits.
5. What is Form 130?
Form 130 is the proposed replacement for Form 16 under the draft income tax rules 2026. It will be the main certificate for tax deducted at source (TDS) from salary.
6. Can I switch from a business loan to a loan against property for tax benefits?
Yes. Switching to a secured business loan can lower your interest cost. The interest paid on such loans for business use is also tax-deductible.
7. Does my tax regime choice affect my loan eligibility?
Lenders look at your “Net Disposable Income.” If you save more tax under the Old Regime, your disposable income goes up, which might help you get an overdraft or a larger loan.
8. What is the “Tax Passbook” (Form 168)?
This is the proposed successor to Form 26AS. It will show all your tax credits, including TDS, TCS, and advance tax, in one simple format.
9. Will meal vouchers be more useful now?
Yes. Increasing the limit from ₹50 to ₹200 per meal means employees can get a larger tax-free benefit from their employers for food expenses.
10. How do these rules help someone with a first time cibil score?
While taxes don’t directly change your score, having more take-home pay helps you manage your first credit card or loan better. This helps in building a strong first time cibil score.
11. Can I get a 100% loan against property with these new tax records?
While can you get a 100% loan against the property depends on many factors, clear tax records under the new rules will certainly help your case.
12. Are these changes final?
No, they are part of the draft income tax rules 2026. The final version will be released after the CBDT reviews the public feedback.
Final Summary: Planning for Tax Year 2026–27
The draft income tax rules 2026 suggest a major shift back to the Old Tax Regime for many. By increasing the limits for education, hostel, and meal allowances, the government is providing a much-needed shield against inflation. For business owners and high-salary earners, this is the time to review your loan against property features benefits and tax plans.
Understanding the concept of loan against property and the new cibil score factors will help you stay ahead. Prepare for the application process for lap by keeping your new tax forms ready.
Do you want to see how much you can save under the new draft rules? Contact us today for a detailed financial check and maximising lap kolkata opportunities.
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