The government has allowed individuals under the new lower tax regime to claim IT exemption on vehicle allowances received from employers.
The Central Board of Direct Taxes (CBDT) has now amended the income tax rules to comply with certain exemptions that employees can benefit from.
These include any allowance paid to cover the cost of travel on tour or on transfer, regardless of any allowance, whether paid on travel or for the duration of the trip in relation to the transfer, due to absence from an employee From his normal place of duty to meet the ordinary daily charges incurred by.
It also includes an exemption for any allowance granted to meet the expenditure incurred on the performance of the duties of an office or the employment of benefits, provided that a free exemption is not provided by the employer.
The CBDT has further clarified that while determining the value of perquisites, no exemption will be available in respect of free food and non-alcoholic beverages through employer-provided vouchers.
In addition, blind, deaf and dumb or orthopedically handicapped employees can also claim exemption of transport allowance. Rs 3,200 per month while computing salary income.
Finance Minister Nirmala Sitharaman in her budget for 2020-21 while offering an alternative rate of income tax to the people, while calculating the total income for the tax purpose, Section 115BAC of the IT Act for persons desirous of certain specified deductions or exemptions Proposed new alternative tax regime. .
Upto annual income under Rs 2.5 lakhs are exempt from tax. Earning between those individuals Rs 2.5 lakh more Rs 5 lakh tax will have to be paid on 5 lakhs. Income between Rs 5 and 7.5 lakh will be taxed at 10 percent, while between them Rs 7.5 and 10 lakhs at 15 percent.
Earning between Rs 10 and 12.5 lakh will pay tax at the rate of 20 percent, while between them Rs 12.5 more Rs 15 lakhs will be paid at the rate of 25 percent. Top income Rs 15 lakh will be taxed at 30%.
The new IT slab will be for individuals not availing certain specified deductions or exemptions.
Nangia & CO LLP partner Shailesh Kumar said: “The notification also assumes that it is the responsibility of employers to provide transportation to certain disabled employees and so such employees are given to come / go from the office, also under the new scheme Exempts allowances “.
The notification does not consider free food / drinks provided by an employer to employees during office hours as a personal benefit to employees and an expense for official purposes. Therefore, similar to other allowances withdrawn under the new scheme / slab, the tax exemption of such free food / drink has been withdrawn under the new scheme, Kumar said.
Taxman DGM Naveen Wadhwa stated “Section 115BAC (2) sets out the list of deductions / exemptions which are not available for deduction while computing the total income if the taxpayer opposes the concessional tax regime. However, the provision empowers the CBDT to preserve certain exemptions available under section 10 which employees can benefit from.