The Central Board of Direct Taxes (CBDT) has notified the amendment in Rule 2B of the Income Tax Rules where the provisions relating to exemption in respect of cash allowance received in lieu of leave travel concession (LTC) has been incorporated.
The move would be beneficial to the employees who had not been able to avail of LTC in the block of 2018-21 due to the COVID-19 pandemic and the nationwide lockdown. This will allow them to claim the exemption in respect of cash allowance subject to fulfillment of certain conditions.
As per the amended rules, a new provision, specified employees, who avails any cash allowance from his employer in lieu of any travel concession or assistance for himself and the members of his family will get an exemption up to thirty thousand rupees or one-third of the specified expenditure, whichever is less, subject to conditions prescribed.
The exemption shall be subject to the following conditions (i) the individual has exercised an option to avail exemption under the second proviso of clause (5) of section 10, in lieu of the exemption under clause (5) of section 10 in respect of one unutilised journey during the block of four calendar years commencing from the calendar year 2018; (ii) the payment in respect of the specified expenditure is made by the individual or any member of his family to a registered person during the specified period; (iii) the payment in respect of the specified expenditure is made by an account payee cheque drawn on a bank or account payee bank draft, or use of electronic clearing system through a bank account or through such other electronic mode as prescribed under rule 6ABBA; and (iv) the individual obtains a tax invoice in respect of specified expenditure from the registered person referred in clause (ii). The provisions are applicable for the assessment year beginning on the 1st day of April, 2021.
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