Big tax relief for disabled employees:
Travel deduction raised under draft tax rules 2026
Feb 16, 2026
Synopsis
New draft tax rules for 2026 offer significant travel tax relief for disabled employees. Those who are blind, deaf, dumb, or orthopedically handicapped will see their travel deduction increase substantially. Employees in the transport sector will also benefit from a higher monthly cap on their travel allowance deduction. These changes aim to provide greater financial support and promote inclusivity.
Higher income tax deduction for handicapped employees’ travel under draft Income Tax Rules, 2026; Know detailsET OnlineHigher income tax deduction for handicapped employees’ travel under draft Income Tax Rules, 2026; Know details (AI generated representative image)
Employees who are blind, deaf, dumb or orthopedically handicapped can claim a travel income tax deduction, which used to be Rs 3,200 per month. Under the draft Income Tax Rules, 2026, these employees get see an increase in tax deductions, especially in metro cities now including Pune, Bengaluru, Ahmedabad and Hyderabad. However, regular employees won’t benefit from this tax deduction, which is available under both the new and old tax regimes.
Aarti Raote, Partner, Deloitte India said to ET Wealth Online: “The proposed tax deduction for employees who are blind, deaf, dumb or orthopedically handicapped has been increased from Rs 3200 to Rs 8,000 for non-metros and Rs 15,000 for 8 metros cities.”
According to Raote, given the rising travel costs and the difficulties faced by differently-abled commuters, this change is welcome.
According to Raote, there is a significant push by all establishments to include all categories of people in the workforce. This not only makes inclusivity a positive change in the office but also projects the organization in good light.
Raote says: “The government too has taken a step forward to support people grappling with various disabilities by enhancing the deduction on account of transport allowance.”
Even more tax deduction for transport sector employees
Employees in transport services used to get a tax break of the lower of 70% of the allowance or Rs 10,000 per month, under the old tax rules, 1962.
Chartered Accountant Avinash Kumar Rao, Partner at Mohindra & Associates, says: “This allowance applies to employees working in transport systems (such as railways, airlines, shipping, road transport) to meet personal expenditure during duty performed in the course of running such transport, provided the employee does not receive daily allowance.”
Rule Reference
Old: Rule 2BB(1)(b), Income-tax Rules, 1962
New: Rule 15(1), Draft Income-tax Rules, 2026
Old 1962 tax rules Draft 2026 tax rules
70% of allowance, capped at Rs 10,000 per month 70% of allowance, capped at Rs 25,000 per month
Source: Mohindra & Associates
Rao says that this was a long-overdue correction. Employees in transport services often incur unavoidable personal expenses while on duty away from base locations. Raising the cap to Rs 25,000 restores the practical relevance of this exemption.
[The Economic Times]
