From Meal Cards to HRA: Major Updates in India’s New Tax Law

From April 1, India’s old Income-tax Act, 1961, will be replaced by the new Income-tax Act, 2025. The government says this is mainly a rewriting and simplification of the law. It is not about increasing taxes. The income tax slabs and tax rates will remain the same.

The main change is in the way income is reported and filed. Details related to salary, deductions, capital gains, and disclosures will now have to be reported more clearly and precisely.

The following are the changes:

Meal Cards

There is good news for salaried employees who receive meal benefits from their employers. Employees who get meal coupons or cards such as those from Sodexo, Pluxee, or Zaggle, or who use subsidised office canteens, will now enjoy a higher tax exemption on these benefits.

Earlier, the tax-free limit was Rs 50 per meal. If an employee received two meals a day, only Rs 100 per day was tax-exempt. Under the new rules, the exemption has been increased to Rs 200 per meal. This means up to Rs 400 per day for two meals can now be tax-free.

Over a month, assuming 22 working days, this works out to Rs 8,800 per month. Over a year, the total tax-free benefit can go up to Rs 105,600.

This benefit is available under both the old and the new tax regimes, provided the employer structures the meal benefit accordingly.

HRA Rules

There are some changes in HRA rules as well. The 50 per cent HRA exemption category, which previously applied only to Mumbai, Kolkata, Delhi and Chennai, has now been extended. It now includes four new cities: Bengaluru, Hyderabad, Pune, and Ahmedabad. Apart from this, other cities will resume under the 40 per cent HRA category.

If you want to claim HRA, you now need to give clearer proof than before. You must submit your landlord’s details in a separate form (Form 124) when your employer calculates your tax. This means you can no longer hide your landlord’s identity, and the rules are stricter to prevent people from making fake or inflated rent claims. Overall, it ensures that only those who actually pay rent can claim HRA benefits.

PAN Rules Tighten

By expanding PAN requirements for high-value transactions, the government wants better tracking of large financial activities and to reduce tax evasion, while easing the burden of reporting smaller transactions. Allowing taxpayers to choose the tax regime directly within the ITR form removes extra steps and makes filing more convenient. Faster refunds for accurate filings encourage honesty and proper reporting, while stricter checks on mismatches improve compliance.

What has changed?

1. ITR-1 / ITR-4 eligibility expanded (up to 2 houses).

What changed: Earlier, these simple forms were mostly for people with 1 house. Now you can have up to 2 houses and still use them.

What it means: More taxpayers can avoid complex forms and file faster.

2. Tax law structure simplified

What changed: Sections reduced from 819 to 536, with simpler wording.

What it means:

• Laws become easier to understand, even without a tax expert.
• Less confusion due to fewer cross-references.

3. Terminology update

What changed: “Financial Year (FY)” and “Assessment Year (AY)” have been replaced by “Tax Year”.

What it means: No more confusion about which year you’re filing for.

4. ITR forms redesigned

What changed: Forms are more structured and detailed.

What it means:

• You’ll need to disclose more details about income, assets, and deductions.
• Less room for hiding or skipping information.

5. Form 16 replaced by Form 130

What changed: Salary reporting becomes more automated.

What it means: Less dependency on employer-issued forms.

6. The Filing process becomes automated.

What changed: Returns will be pre-filled and auto-validated.

What it means:

• Faster filing.
• Errors and mismatches are flagged instantly.
• Less chance of notices later (if you correct things upfront).

7. PAN usage expanded

What changed: a PAN is required in more transactions.

What it means:

• Government tracks high-value spending more closely.
• Harder to keep income unreported.

8. Capital gains rules clarified

What changed: Clearer rules for:

• Holding period
• Asset valuation

What it means:

• Investors must be more precise when reporting gains.
• Mistakes in stock/property reporting could lead to scrutiny.

9. Old vs New tax regime

What changed: Choice is now made directly in the ITR.

What it means: No separate forms needed.

10. HRA rules tightened

What changed:

• More cities qualify for a 50% exemption.
• Must disclose relationship with landlord

What it means:

• Fake rent receipts become risky.
• Genuine taxpayers may get slightly higher benefits.

11. Perquisites revised

What changed: Limits updated after many years.

What it means: Salary structures may change.

Overall Impact

• Filing becomes simpler but more transparent.
• The government relies more on data and automation.
• Taxpayers need to be more accurate and honest.
• Less paperwork, but more reporting discipline

What taxpayers should do before April

• Check whether the old tax system or the new one saves you more money.
• Talk to your HR to see if your salary is arranged in a tax-friendly way.
• Make sure your landlord’s name and info are correct for claiming HRA.
• Save all documents if you sold shares, property, or other assets.
• Check that your PAN is correctly connected to your bank, investments, etc.
• Regularly check if your employer is deducting the correct tax amount.