Physically disabled employees including blind, deaf, mute or orthopedically handicapped are set to benefit from higher travel-related income tax deductions under the draft Income Tax Rules, 2026.
The proposed rules provide for significant enhancement in transport allowance deductions, applicable under both the old and new tax regimes. However, regular employees will not qualify to get this benefit, business daily Economic Times reported.
Higher Deduction for Differently-Abled Employees
An tax expert said the draft rules propose raising the deduction for employees with specified disabilities from Rs 3,200 per month to Rs 8,000 in non-metros and Rs 15,000 in eight metro cities, with Pune, Bengaluru, Ahmedabad and Hyderabad newly added to the list.
She termed the hike a welcome step amid rising travel costs, noting that higher tax support reinforces workplace inclusivity and reflects the government’s backing for differently-abled employees.
Relief for Employees in Transport Services
The draft rules also propose changes for employees working in transport services.
Another tax expert said that under the current Income-tax Rules, transport sector employees could claim an exemption of 70 percent of their allowance, capped at Rs 10,000 per month, if no daily allowance was received.
The draft Income-tax Rules, 2026 retain the 70 percent exemption but propose raising the cap to Rs 25,000. Rao noted that the revision is overdue, as transport staff incur unavoidable expenses while on duty away from base, and the higher limit restores the exemption’s practical value.
The relevant rule reference shifts from Rule 2BB(1)(b) of the Income-tax Rules, 1962 to the proposed Rule 15(1) under the Draft Income-tax Rules, 2026.
If notified, the revisions are expected to offer meaningful relief to differently-abled employees and transport sector workers grappling with rising travel and duty-related expenses.
