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Conveyance for official tours, transfers, daily travel to be tax-free in new tax regime
June, 29th 2020

The new rules will come into effect from April 1, 2021, and shall accordingly apply in relation to the assessment year 2021-22 and subsequent assessment years, said the CBDT.

Salaried individuals will now be able to claim income tax exemption for conveyance, travel and other allowances given by employers under the new regime that offers to tax your income at lower slab rates. The Central Board of Direct Taxes (CBDT) on Saturday issued a notification in this regard.

The latest notification from CBDT will enable individuals to claim exemptions for allowance to meet cost of travel, daily expenses on transfer, tour allowance for travel for official purposes to meet the travel and daily expenses, and conveyance allowance for meeting conveyance expenditure incurred in course of performing official duties.

For individuals with disabilities – blind, deaf and dumb or orthopedically handicapped employees – the latest rule prescribes providing transport as a responsibility of the employer. Hence, individuals with disabilities can claim ad hoc exemption of transport allowance of Rs 3,200 per month while computing salaried income.

“The notification has rightly exempted allowances in the nature of tour, transfer or conveyance for official purposes, since these are essentially incurred by employees not for their personal benefit, but for discharging their official duties, and therefore expecting employees to pay tax on such amount even under the new scheme would have been unreasonable,” the Economic Times quoted Shailesh Kumar, partner, Nangia & Co LLP, as saying.

The new rules will come into effect from April 1, 2021, and shall accordingly apply in relation to the assessment year 2021-22 and subsequent assessment years said the CBDT.

However, the benefit of tax exemption for free meals or non-alcoholic beverages or meal vouchers up to Rs 50 per meal during office hours will not be available to employees opting for the new scheme.

The new tax regime provides limited exemptions or deductions as it aims to tax your income at lower slab rates.

“The government is right in allowing these allowances since they usually correspond to actual expenses incurred by the employees in the performance of their duties and therefore should be available even in the new regime, but the entire purpose of doing away with allowances/exemptions was to simplify the tax code and go for lower rates... reintroducing allowances selectively will defeat that purpose,” the publication quoted Amit Maheshwari, tax partner at AKM Global as saying.

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