NEW DELHI: The federal government has allowed people underneath new decrease tax regime to say I-T exemption on conveyance allowance acquired from employers.
The Central Board of Direct Taxes (CBDT) has now amended Revenue Tax guidelines to prescribe sure exemptions which may be availed by the workers.
These embody any allowance granted to fulfill 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 fulfill the abnormal day by day costs incurred by an worker on account of absence from his regular place of responsibility.
It additionally consists of exemption for any allowance granted to fulfill the expenditure incurred on conveyance in efficiency of duties of an workplace or employment of revenue, supplied that free conveyance shouldn’t be supplied by the employer.
The CBDT has additional clarified that whereas figuring out worth of perquisites, no exemption will likely be accessible in respect of free meals and non-alcoholic beverage supplied by employer by way of paid voucher.
Additional, blind, deaf and dumb or orthopedically handicap workers also can declare ad-hoc exemption of transport allowance of Rs 3,200 monthly whereas computing salaried revenue.
Providing an non-obligatory decrease charge of revenue tax to people, Finance Minister Nirmala Sitharaman in her Finances for 2020-21 proposed new non-obligatory tax regime underneath part 115BAC of I-T Act for people prepared to forego sure specified deductions or exemptions whereas computing whole revenue for tax objective.
Below this, annual revenue as much as Rs 2.5 lakh is exempt from tax. These people incomes between Rs 2.5 lakh and Rs 5 lakh can pay 5 per cent tax. Revenue between Rs 5 and seven.5 lakh will likely be taxed at 10 per cent, whereas these between Rs 7.5 and 10 lakh at 15 per cent.
These incomes between Rs 10 and 12.5 lakh can pay tax on the charge of 20 per cent, whereas these between Rs 12.5 and Rs 15 lakh can pay on the charge of 25 per cent. Revenue above Rs 15 lakh will likely be taxed at 30 per cent.
The brand new I-T slabs can be for people not availing sure specified deductions or exemptions.
Nangia & Co LLP Associate Shailesh Kumar stated: “The notification additionally considers that it’s employers’ duty to offer transport to workers with sure disabilities and due to this fact exempts allowance given to such workers for commuting to/ from workplace, even underneath new scheme”.
The notification considers free meal/ drinks supplied by an employer to workers throughout workplace hours to be a private profit to workers and never an expenditure for official functions. Due to this fact, just like different allowances withdrawn underneath new scheme/ slabs, tax exemption of such free meals/ drinks has been withdrawn underneath the brand new scheme, Kumar added.
Taxmann DGM Naveen Wadhwa stated “Part 115BAC(2) prescribes record of deductions/exemptions which aren’t accessible for deduction whereas computing whole revenue if taxpayer opts for concessional tax regime. Nonetheless, the availability empowers the CBDT to prescribe sure exemptions accessible underneath part 10 which may be availed by the workers”.