Employees allowed to claim I-T exemption on conveyance allowance under new tax regime: CBDT


Employees allowed to claim I-T exemption on conveyance allowance under new tax regime: CBDT
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Employees allowed to claim I-T exemption on conveyance allowance under new tax regime: CBDT

The authorities has allowed people under the new decrease tax regime to claim I-T exemption on conveyance allowance acquired from employers. The Central Board of Direct Taxes (CBDT) has now amended Income Tax guidelines to prescribe sure exemptions which may be availed by the staff.

These embrace any allowance granted to meet the price of journey on tour or on switch, any allowance, whether or not, granted on tour or for the interval of journey in reference to switch, to meet the strange each day costs incurred by an worker on account of absence from his regular place of obligation.

It additionally consists of exemption for any allowance granted to meet the expenditure incurred on conveyance in efficiency of duties of an workplace or employment of revenue, supplied that free conveyance is just not supplied by the employer.

The CBDT has additional clarified that whereas figuring out worth of perquisites, no exemption can be accessible in respect of free meals and non-alcoholic beverage supplied by employer by means of paid voucher.

Further, blind, deaf and dumb or orthopedically handicap staff may also claim ad-hoc exemption of transport allowance of Rs 3,200 per 30 days whereas computing salaried revenue.

Offering an non-obligatory decrease price of revenue tax to people, Finance Minister Nirmala Sitharaman in her Budget for 2020-21 proposed new non-obligatory tax regime under part 115BAC of I-T Act for people keen to forego sure specified deductions or exemptions whereas computing whole revenue for tax function.

Under this, annual revenue up to Rs 2.5 lakh is exempt from tax. Those people incomes between Rs 2.5 lakh and Rs 5 lakh pays 5 per cent tax. Income between Rs 5 and seven.5 lakh can be taxed at 10 per cent, whereas these between Rs 7.5 and 10 lakh at 15 per cent.

Those incomes between Rs 10 and 12.5 lakh pays tax on the price of 20 per cent, whereas these between Rs 12.5 and Rs 15 lakh pays on the price of 25 per cent. Income above Rs 15 lakh can be taxed at 30 per cent. The new I-T slabs could be for people not availing sure specified deductions or exemptions.

Nangia & Co LLP Partner Shailesh Kumar mentioned: “The notification also considers that it is employers’ responsibility to provide transport to employees with certain disabilities and therefore exempts allowance given to such employees for commuting to/ from office, even under new scheme”.

The notification considers free meal/ drinks supplied by an employer to staff throughout workplace hours to be a private profit to staff and never an expenditure for official functions. Therefore, related to different allowances withdrawn under new scheme/ slabs, tax exemption of such free meals/ drinks has been withdrawn under the new scheme, Kumar added.

Taxmann DGM Naveen Wadhwa mentioned “Section 115BAC(2) prescribes list of deductions/exemptions which are not available for deduction while computing total income if taxpayer opts for concessional tax regime. However, the provision empowers the CBDT to prescribe certain exemptions available under section 10 which can be availed by the employees”.

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