The Indian government has updated the income tax rules, significantly increasing the tax-free limits on child education and hostel allowances. The child education allowance has been raised from ₹100 to ₹3,000 per month per child, while the hostel allowance has increased from ₹300 to ₹9,000 per month per child. For families with two children, this means a maximum possible exemption of ₹2.88 lakh annually, which can substantially reduce taxable income. However, these benefits are only available to salaried individuals under the old tax regime, as those opting for the new tax regime cannot claim these allowances. For taxpayers in the 30% tax bracket, this exemption could lead to tax savings of around ₹83,520. To qualify, employers must include the child education and hostel allowances in the Cost to Company (CTC), and employees should retain relevant documentation for tax proof.