New Exemptions prescribed for taxpayers opting to be governed by New Tax Regime:
The Finance Act 2020 introduced an optional new tax regime for individuals and Hindu Undivided Family (HUF) taxpayers, which is explained in my article dated 04 June, 2020. New personal concessional tax regime – is it a smart option?
The taxpayers opting to be governed under the new tax regime have to forego various deductions and exemptions, unless specifically provided. (Refer part B of the above article).
Recently, the Central Board of Direct Taxes issued a notification notifying the exemptions available under section 10(14) of the Act as well as providing that the exemption available in respect of food coupons would be taxable. The analysis of said notification is provided hereunder:
Amendment to Rule 2BB of the Income-tax Rules, 1962 (IT Rules)
A new sub-rule is introduced in Rule 2BB of the IT Rules to provide that following exemptions which are available for individuals taxpayers opting to be governed by current tax regime would be available to individuals opting for new tax regime:
Amendment to Perquisite Valuation Rules (i.e. Rule 3 of the IT Rules)
Where an employer provides free food and non-alcoholic beverages to its employees, the expenditure incurred towards it (less amount recovered from employees) would be treated as perquisite in the hands of employee. However, if following conditions are satisfied, such benefit shall not be taxed as perquisite:
Where an employee opts to be governed by new tax regime, such perquisite exemption in respect of free food and non-alcoholic beverage provided by employer through paid voucher will not be available.