New tax bill expands tax-free commuting reimbursements

The proposed Income Tax Bill 2025 introduces changes to tax-free perquisites for salaried employees. It clarifies that commuting costs covered by employers, including reimbursements for any vehicle, will not be taxed, expanding previous restrictions. Previously, only vehicles provided directly by employers qualified for tax-free status. The new bill removes this limitation, allowing any employer-incurred commuting expenses to be non-taxable, which could simplify compliance for employees and employers. However, the change may increase compliance burdens, as employers will need to verify and document reimbursements for commuting. Tax authorities may impose stricter checks to ensure these expenses are legitimate and not disguised compensation.