NEW DELHI: The Central Board of Direct Taxes has notified amendments in Income Tax rules, which allow salaried employees to claim a set of exemptions if they apply for the lower personal income tax regime. This includes exemptions that may be claimed on conveyance allowances extended by employers.
The new regime, which is optional, will be applicable for income earned from financial year 2020-21. A new sub-section has been added to the rule 2BB to implement these exemptions. They include any allowance granted to meet the cost of travel on tour or on transfer; any allowance, granted on tour for the period of journey in connection with a transfer, to meet ordinary daily charges incurred by an employee on account of absence from his/her normal place of duty; and any allowance to meet the expenditure on conveyance in performance of duties, provided free conveyance is not provided by the employer.
The notification provides for exemption on transport allowance to physically challenged employees. The exemption limit is set at Rs 3,200 per month. However, the Board clarified that while determining the value of perquisites, no exemption will be available in the case of free food and non-alcoholic beverages provided by the employer.
The notification considers this to be a personal benefit to employees and not an expenditure for official purposes. Therefore, similar to other allowances under the new scheme, this has also been withdrawn, said Nangia & Co LLP Partner Shailesh Kumar.