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The Central Board of Direct Taxes amends the Income-tax Rules, 1962 to provide rules for cash allowances received in lieu of travel concessions. The new rules apply for the assessment year beginning on the 1st day of April, 2021. An individual employee may claim an exemption for cash allowances received from an employer in lieu of travel concessions or assistance. The exempted amount cannot exceed thirty-six thousand rupees per person for the individual and family members, or one-third of the specified expenditure, whichever is less. The individual must fulfill specific conditions. The individual exercises an option to avail the exemption in lieu of an unutilised journey during the block of four calendar years starting from 2018. The payment for the specified expenditure goes to a registered person during the specified period. The payment uses an account payee cheque, bank draft, electronic clearing system, or another prescribed electronic mode. The individual obtains a tax invoice from the registered person. The specified expenditure means money spent on goods or services that have a tax rate of twelve per cent or above under Goods and Services Tax laws. The specified period begins on the 12th day of October, 2020 and ends on the 31st day of March, 2021.
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MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES) NOTIFICATION New Delhi, the 5th May, 2021 (INCOME-TAX)
G.S.R. 320(E).—In exercise of the powers conferred by clause (5) of section 10 read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct taxes hereby makes the following rules further to amend the Income-tax Rules,1962, namely:─
Explanation 2 For the removal of doubt, it is hereby clarified that if the amount received by or due to an individual, as per the terms of his employment, from his employer in relation to himself and member of his family, in connection with the specified expenditure is in excess of the thirty six thousand rupees per person, for the individual and the member of his family, the exemption under this sub-rule would be restricted to thirty-six thousand rupees per person, for the individual and the member of his family, or one-third of the specified expenditure, whichever is less. Explanation 3 It is hereby clarified that the clarification issued by the Department of Expenditure, Ministry of Finance, vide OM F. No 12(2)/2020-EII (A) Dated 12th October, 2020 and any subsequent clarifications, if any, issued in this regard shall apply mutatis mutandis to the exemption under this sub-rule. (1B) Where an exemption under the second proviso to clause (5) of section 10 is claimed and allowed, sub-rule (2) shall have effect as if for the words „two journeys‟ , the words „one journey‟ has been substituted.”.
[Notification No. 50/2021/F. No.370142/14/2021-TPL] KAMLESH CHANDRA VARSHNEY, Jt. Secy. (Tax Policy and Legislation)
Explanatory Memorandum: It is hereby certified that no person is being adversely affected by giving retrospective effect to these rules. Note: The principal rules were published in the Gazette of India, Extraordinary, Part-II, Section-3, Sub-section (ii) vide number S.O. 969 (E), dated the 26th March, 1962 and last amended vide notification number G.S.R. 318(E) dated 4th May, 2021.
