The proposed income tax changes, if notified, would more than double — and in some cities nearly quintuple — the monthly travel deduction available to employees with disabilities. For many, it could make a meaningful difference to their take-home pay.
Every working day, Priya boards two buses and a metro to reach her office across the city. She is orthopedically handicapped, and the journey, manageable on good days, can be exhausting on bad ones. What she has never been able to explain to the tax department is why her commuting cost — unavoidably higher than most — deserves a deduction of just Rs 3,200 a month. That figure has not moved in years.
If the government’s draft Income Tax Rules for 2026 are notified as proposed, things may be about to change — not just for Priya, but for tens of thousands of disabled employees across the country.
The Numbers That Actually MatterUnder current income tax rules, employees who are blind, deaf and dumb, or orthopedically handicapped can claim a monthly deduction on travel costs, but the cap of Rs 3,200 has long been seen as inadequate. The draft rules propose raising this substantially — to Rs 8,000 per month in non-metro cities, and Rs 15,000 per month in eight designated metro centres.
Crucially, the definition of “metro” is being updated. Alongside the existing centres, the revised list now includes Pune, Bengaluru, Ahmedabad and Hyderabad — cities that have grown enormously in both population and commuting cost over the past two decades, but which employees in have not been able to claim the higher metro relief.
For a Bengaluru-based employee with a disability earning Rs 8 lakh a year, the revised deduction alone could translate into tax savings worth several thousand rupees annually. In a city where a single Uber ride can cost Rs 300, the practical relevance of that relief is hard to overstate.
A Reflection of Reality, Not Just Policy
Aarti Raote, Partner at Deloitte India, describes the proposed hike as a welcome and necessary correction. “The cost of commuting has increased significantly over the years,” she told ET Wealth Online. “For differently-abled employees, the challenge is compounded by limited public transport options and the frequent need for personalised mobility arrangements.”
She sees the revision as a step toward more genuine workplace inclusion — one that goes beyond symbolic gestures. When an employer offers flexibility, and the government offers tax relief calibrated to real costs, the cumulative effect can shift employment outcomes for people who might otherwise find the economics of working outside the home difficult to justify.
Transport Workers Get Long-Awaited Relief TooThe proposed rules do not stop at disability-related relief. Employees in the transport sector — across railways, airlines, shipping and road transport — are in line for a significant enhancement in their exemption limits too.
Under the current framework, such employees can claim an exemption on allowances capped at Rs 10,000 per month, subject to the condition that it does not exceed 70% of the allowance received. The draft rules propose more than doubling that ceiling to Rs 25,000 a month, while keeping the 70% linkage in place.
Chartered Accountant Avinash Kumar Rao, Partner at Mohindra & Associates, says the revision restores common sense to a provision that had lost its practical edge. “Transport workers often spend days away from their base location,” he explains. “They incur real, unavoidable personal expenses — food, accommodation, local travel — that are difficult to document individually. The allowance exemption was always meant to acknowledge that reality, but the cap had become out of step with what things actually cost.”
The Bigger Picture: Modernising Tax Provisions
Both sets of changes form part of a wider effort to modernise India’s income tax architecture — one that acknowledges that cost structures for employees have shifted considerably since many of these limits were last revised. The government has invited feedback on the draft rules, and final implementation will depend on the formal notification of rules following those consultations.
Tax professionals broadly welcome the direction of travel, even if they caution that devil will, as always, be in the details. Questions remain about how metro status will be determined going forward, whether the list of eligible cities will be revised periodically, and how the 70% cap for transport workers will interact with varying pay structures across sectors.
But for employees like Priya, who navigate the daily logistics of work and disability in a city that does not always make either straightforward, the message from the draft rules is at least clear: the tax code is beginning to notice the gap between what it assumed commuting costs and what it actually costs.