Eligible specially abled employees working in metro cities may soon be able to claim transport allowance tax exemption of up to ₹15,000 per month along with dearness allowance under revised income tax provisions applicable from Assessment Year 2027-28.

The proposed revised framework significantly increases the earlier tax-free limit of ₹3,200 per month available under existing rules.

According to reports, the revised exemption structure will apply to taxpayers filing income tax returns for Financial Year 2026-27.

The relief is specifically meant for eligible disabled employees and will not apply to all salaried taxpayers.

Under current income tax rules, transport allowance exemptions continue to remain available for certain categories of specially abled employees, including individuals who are blind, deaf and mute, or those suffering from orthopaedic disabilities affecting upper or lower limbs.

The revised exemption limits are proposed as follows:

  • Metro cities: ₹15,000 per month plus dearness allowance
  • Non-metro cities: ₹8,000 per month plus dearness allowance

The metro city category includes major urban centres such as Bengaluru, Mumbai, Delhi, Kolkata, Chennai and Hyderabad.

Experts say the move reflects increasing commuting expenses and greater policy attention towards accessibility and support for disabled employees in workplaces.

Tax expert Gaurav Makhijani reportedly described the revision as a significant relief measure, noting that eligible employees in metro cities could receive additional annual tax-exempt benefits of up to ₹1.42 lakh under the updated structure.

For taxpayers filing returns for FY 2025-26, however, the older exemption limit of ₹3,200 per month will continue to remain applicable.

Employees are advised to verify whether transport allowance is included in their salary structure and whether exemptions have already been considered by employers while calculating tax deducted at source.

The exemption will reportedly continue to remain available under both the old and new tax regimes for eligible employees.

The development comes amid broader discussions around tax reforms, employee benefits and rising urban living costs across India