Section 115BAC(2) prescribes the list of deductions /exemptions which are not available for deduction while computing total income if a taxpayer opts for the concessional tax regime.

The Union Budget 2020 had introduced a new income tax regime under Section 115BAC of the Income Tax Act, giving an option to individual taxpayers and HUFs to pay income tax at lower rates. The new system is applicable for income earned between April 1, 2020 and March 31, 2021 (FY 2020-21), which relates to AY 2021-22.

Now, in a bid to give further relief to taxpayaers, the CBDT has amended Rule 2BB, notifying that a salaried employee who opts for the new income tax regime can claim certain exempt allowances.

It may be noted that Section 115BAC(2) prescribes the list of deductions /exemptions which are not available for deduction while computing total income if a taxpayer opts for the concessional tax regime. However, the provision empowers the CBDT to prescribe certain exemptions available under Section 10 which can be availed by the employees.

“Now exercising such power, the Board has allowed exemption of allowances granted to employees to meet their cost of travel on tour, ordinary daily charges incurred by them due to absence from normal place of duty and expenses incurred by them on conveyance while performing office duties. Further, blind, deaf and dumb or orthopedically handicap employees can also claim ad-hoc exemption of transport allowance of Rs 3,200 per month while computing salaried income,” said Naveen Wadhwa, DGM, Taxmann.

The CBDT, however, has further clarified that while determining value of perquisites, no exemption shall be available in respect of free food and non-alcoholic beverage provided by the employer through paid vouchers.