Interestingly, retrospectively, and notably, The Central Board of Direct Tax (CBDT), in its efforts to provide benefit/privilege to the salaried class employees, has provided a big relief to the aforesaid class by an amendment in Rule 2B of the Income Tax Rules wherein the proviso connected to exemption with respect to those cash allowances that have been received in lieu (instead) of leave travel concession (LTC) has been incorporated.
It is worthwhile mentioning here that it is a retrospective benefit. It simply means benefits shall be received of past dates also — This amendment shall provide benefit to salaried employees from 2018 onwards. So the employees who had not availed Leave Travel Concession in the block of 2019-21 due to the nationwide lockdown consequent to the COVID-19 pandemic
What Exactly is the Amended Rule?
According to the amended rules, any employee, who has received cash allowance from his employer in lieu (instead) of any travel concession or assistance for himself including his family members shall get an exemption up to Rs 30,000 or one-third of the specified expenditure, whichever is less, subject to fulfilment of below-mentioned conditions
- The individual has used an option to avail exemption as per the second provision of clause (5) of section 10 in lieu (instead) of the exemption receivable under clause (5) of section 10 in relation to one unutilized journey commencing from the year 2018
- The payment of the aforesaid expenditure has been made by the individual or any of his family members to a registered person.
- the payment of the aforesaid expenditure has been made as prescribed under rule 6ABBA; and
- The individual has acquired a tax invoice for aforesaid expenditure from the registered person who is mentioned in the clause. Moreover, The provisions have been applicable for the assessment year that begins on the 1st day of April 2021
