In a significant move to provide relief to salaried taxpayers, the Finance Act, 2025, has substantially increased the income limits for two key tax-free perquisites. These changes aim to reduce the tax burden on salaried individuals and promote fairness in the tax system. The updated thresholds apply to the perquisites that were previously capped at outdated levels, impacting a large number of employees.
One of the key changes in the Finance Act 2025 is the increase in the income limit for tax-free medical reimbursements. The previous limit of ₹1 lakh has been raised to ₹2 lakh, making it easier for employees to claim medical expenses without worrying about taxation. This change will particularly benefit salaried individuals who incur significant medical costs.
Additionally, the limits for tax-free rent-free housing provided by employers have also been raised. The previous cap of ₹30,000 has been increased to ₹50,000, offering greater financial flexibility for employees who benefit from such housing perks.
These changes are expected to ease the financial strain on salaried taxpayers and encourage a higher level of compliance with tax regulations. With these adjustments, the government hopes to create a more equitable taxation system for the salaried class, reflecting the growing needs of modern employees.
