For tax year 2026-27, an employee who has opted out of the default new tax regime works for an undertaking running a transport service. He receives ₹10,000 a month to meet his personal expenditure…

The Income-tax Rules, 2026 exempt an allowance paid to an employee of a transport undertaking for personal expenditure during running duty up to 70% of the allowance, subject to a ceiling of ₹25,000 a month, where no daily allowance is received. Seventy per cent of ₹10,000 is ₹7,000, well within the ceiling. The full ₹10,000 is not exempt, because the exemption is the lower of 70% of the allowance and the ₹25,000 ceiling.