New Income Tax Rules: Higher Perk Limits and Stricter Crypto Reporting

Under the revised income tax framework, the government has updated several rules to better reflect today’s economy. These changes include higher limits for tax-free employee benefits, stricter rules for crypto assets, and new reporting requirements for high-value transactions.

Higher Limits for Employee Benefits (Perquisites)

The government has updated the tax-free limits for employee perks for the first time in years. These changes are designed to align with rising costs and incomes.

Key updates include:

• Office Meals: Revised limits for tax-free food provided by employers.
• Gifts: Higher thresholds for tax-exempt gifts received from your employer.
• Education: Updated tax-free limits for educational facilities provided to an employee’s family members.
• Company Cars: New rules for calculating the taxable value of motor vehicles provided by employers.

Stricter Reporting for Crypto Assets

To prevent tax evasion, the new rules introduce much stricter reporting for digital assets. Crypto exchanges and service providers now have detailed “due diligence” obligations.

Under this framework, crypto platforms must:

• Follow a structured process to collect and verify user information.
• Report all transactions directly to tax authorities.
• Maintain ongoing records to help the government track virtual digital assets.

These measures aim to close data gaps and improve transparency without banning crypto entirely.

New Thresholds for PAN and Property Transactions

The rules have also simplified reporting for certain high-value purchases by raising the limits for quoting a PAN (Permanent Account Number).

Additionally, the purchase of stamp paper has been added as a new category that must be reported to tax authorities.

Important Changes for Non-Residents

Non-resident taxpayers who want to claim benefits under Double Taxation Avoidance Agreements (DTAA) must now use Form 41, which replaces the old Form 10F.

A significant update is that non-residents must now provide a communication address in India to claim these treaty benefits. This may be a challenge for foreign investors or individuals who do not have a physical presence or an office in the country.

Digital Record-Keeping for Professionals

Professionals who use the “presumptive taxation” scheme (such as doctors, lawyers, and IT consultants) now face new digital requirements. They must:

• Keep all books of accounts in an electronic format.
• Ensure these records are always accessible in India.
• Maintain daily backups on servers physically located within India.

Recognition of the Digital Rupee

The revised rules formally recognize Central Bank Digital Currency (CBDC) as an accepted electronic payment mode. This step is expected to encourage more people and businesses to use the digital rupee within the formal financial system.

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