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Employees can claim exemption on conveyance allowance under new I-T regime
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SME Times News Bureau | 29 Jun, 2020
In a major relief for salaried taxpayers, the Central Board of Direct
Taxes (CBDT) has said that under the new income tax regime, employees
can claim for tax exemption on conveyance allowance received from their
employers
The Income-tax (13th Amendment) Rules, 2020, which
includes the provision, shall come into force from April 1, 2021 and
shall accordingly apply in relation to the assessment year 2021-22 and
subsequent assessment years.
The new optional tax regime was
announced in this year's budget, wherein income tax rates would be lower
for the individual taxpayers given they forgo deductions and exemptions
such as investment in the insurance policy, NSC, PPF and others.
Rajat
Mohan, Senior Partner at AMRG & Associates said: "CBDT has amended
the income tax rules to allow certain exemptions to the employee in the
new tax regime. These include allowances to cover travel costs on tour
or transfers, ordinary daily charges incurred on account of absence from
his normal place of duty and conveyance allowance."
He noted
that initially in the new regime most of the allowances and exemptions
were withdrawn and the department has made a change in the basic
fundamental idea of the new regime.
"Though, this is a welcome
move for many employees for whom these expenses are on behalf of the
employer and shall not be taxed in the hands of the employee. However,
this can be a beginning to a plethora of notifications and circulars
making the new regime equally complicated as the old one. If more of
these exemptions are introduced, the new regime will lose its cardinal
nature of simplicity," Mohan added.
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