Govt allows I-T exemption on conveyance allowance under new tax regime

The government has allowed individuals to claim IT exemption on vehicle allowance received from employers under the new lower tax regime. 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.

Further, blind, deaf and dumb or orthopedically handicapped employees can claim exemption in transport allowance of Rs 3,200 per month while computing salaried 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, seeks to make certain specified deductions or exemptions for the section 115BAC of the IT Act. Proposed new alternative tax regime. an objective.

Under this, annual income up to Rs 2.5 lakh is exempt from tax. Individuals who earn between 2.5 lakh and 5 lakh rupees will pay 5 percent tax. Income between Rs 5 and 7.5 lakh will be taxed at 10 percent, while income between Rs 7.5 and 10 lakh is 15 percent. Those earning Rs 10 to 12.5 lakh will be taxed at the rate of 20 percent, and between Rs 12.5 and Rs 15 lakh will be taxed at the rate of 25 percent. Income above Rs 15 lakh will be taxed at 30 percent.

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 hence allowances to such employees to and from the office, also under the new scheme Has been exempted.

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 said that section 115BAC (2) sets out the list of deductions / exemptions which are not available for deduction while computing the total income if the taxpayer objected to the concessional tax regime. However, the provision empowers the CBDT to preserve certain exemptions available under section 10 which employees can benefit from.

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