Income tax exemptions to lower tax assessee for certain allowances

The direct tax board has provided income tax exemptions for certain allowances to those opting for the lower tax regime. 

Now, assessees can claim an exemption in respect of tour, transfer allowance, daily travel allowance, and conveyance allowance. Besides, transport allowance for handicapped up to Rs 3,200 a month would also be given ad-hoc exemption. 

Amending the relevant provisions of the Income Tax Act for this purpose, the Central Board of Direct Taxes said the exemption provided in respect of free food and non-alcoholic beverage provided by such employer through paid voucher will not apply to an employee. 

The Budget for 2020-21 came out with an option of lower tax regime for those who forgo certain exemptions. For instance, those opting for the scheme are required to pay tax at the reduced rate of 10 per cent for income between Rs 5 lakh to Rs 7. 5 lakh against the current rate of 20 per cent.