Employee Perquisite Caps Revised; Crypto Reporting Tightened

In the Union Budget 2026, the government proposed changes to income tax rules linked to employee benefits, crypto transactions and financial disclosures. The intent is to fix inconsistencies in salary taxation and tighten how taxable income is computed.

One of the proposed changes is to revise thresholds for several employee perquisites. These include tax-free office meals, gifts from employers, education facilities provided to employees’ family members and the use of employer-owned vehicles. The earlier limits had remained in place for decades despite higher salaries and rising costs.

Why The Government Changed Employee Perquisite Rules?

The revised rules update how common workplace benefits are valued for tax purposes. Earlier thresholds no longer reflected present-day compensation structures. As a result, many routine benefits were being taxed.

The updated limits are expected to reduce valuation disputes and simplify payroll compliance.

What Changed Regarding Crypto Reporting?

The government has also proposed major changes to the rules regarding the reporting of cryptocurrency transactions. For the first time, reporting and disclosure norms have been expanded for crypto-asset service providers and intermediaries.

These platforms will now have to follow prescribed procedures for collecting user information. They must verify identities, conduct ongoing due diligence and report transaction data to tax authorities. The intent is to improve the traceability of virtual digital asset transactions.

The government has also announced penalties to enforce compliance with crypto-reporting rules. Participants failing to report crypto transactions may face a penalty of ₹200 per day. In the case of incorrect reporting or failure to correct inaccuracies, a penalty of ₹50,000 may be imposed. These amendments are expected to come into effect from 1 April 2026.

What Other Reporting Rules Have Been Updated?

Apart from revisions to employee perquisites and crypto-reporting rules, the government has also proposed changes to basic tax laws. These proposals are as follows:

• Sharing PAN Card for motor vehicle transactions is now mandatory only if the transaction value exceeds ₹5 lakhs.

• The threshold for submitting the PAN Card for immovable property transactions has been increased from ₹10 lakhs to ₹20 lakhs.

• The reporting limit for real estate transactions under SFT (Statement of Financial Transactions) has been increased from ₹30 lakhs to ₹45 lakhs.

• A new Form 41 is required for non-residents to claim benefits under the DTAA (Double Taxation Avoidance Agreement).

• Non-residents must also provide a local communication address while applying for the DTAA benefits.

• Working professionals opting for the presumptive taxation scheme must maintain digital books of accounts.

• Central Bank Digital Currency (CBDC) has been formally recognised as an accepted electronic mode of payment.

Why Are These Changes Important?

The revised rules play a crucial role in updating dormant tax laws. Certain thresholds required revisions, as they haven’t been changed in decades. Efforts are also made to bring crypto transactions under established reporting regimes and a defined framework. The long-term effects of these changes are yet to be ascertained.

Sources:

The Economic Times

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