Salaried Employee Opting For New Tax Regime: Clarification on Taxation

Clarification on Taxation for FY2020-21; Effective 1 April 2020

Central Board of Direct Tax (CBDT) has amended Rule 2BB of Income Tax [which prescribes allowances for the purposes of Sec. 10(14)], allows salaried employees opting for new tax regime u/s. 115BAC of Income Tax Act, 1961 to claim exemption u/s. 10(14) in certain cases; Provides that such an assessee can claim exemption u/s. 10(14) only in respect of –

1) Conveyance Allowance for Performance of Office Duties,

2) Any Allowance for the Cost of Travel/ Tour/ Transfer,

3) Daily Allowance given to Employees under Certain Conditions and

4) Transport allowance for handicapped, subject to the conditions mentioned therein;

Also amends Rule 3 of Income Tax [dealing with perquisites valuation], states that “the exemption provided in the first proviso in respect of free food and nonalcoholic beverage provided by such employer through paid voucher shall not apply to an employee, being an assessee, who has exercised option under sub-section (5) of section 115BAC of Income Tax Act, 1961.”; Amended Rule shall come into force from the 1 day of April, 2021 and shall accordingly apply in relation to the assessment year 2021-22 (Fiscal Year 2020-21) and subsequent assessment years.

Download: Official Gazette

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