Issue/Justification

As per the provisions of section 10(5) of the Income-tax Act, 1961, an exemption of the value of leave Travel Concession/ Assistance received by the employee from his employer is provided subject to fulfillment of prescribed conditions. Rule 2B provides for the specified conditions to be fulfilled. One of the conditions is that the exemption can be availed only in respect of two journeys performed in a block of four CALENDAR YEARS.

The concept of “Calendar year” was introduced in the year prior to 1989 when there was no uniform Previous Year. Since 1989 uniform Previous Year has been introduced i.e. April– March. To be in line with the concept of “financial year” adopted by other provisions of the Income- tax Act, it is suggested that the concept of calendar year should be replaced with financial year (April – March) i.e. the calculation of block period shall be shifted from Calendar year to Financial Year.

Suggestion

To be in line with the concept of “financial year” adopted by other provisions of the Income tax Act, it is suggested that the concept of calendar year should be replaced with financial year (April – March)

(SUGGESTIONS TO REDUCE / MINIMIZE LITIGATIONS)

Source- ICAI Pre- Budget Memorandum–2018 (Direct Taxes and International Tax)

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Tags : Budget (1951) Budget 2018 (394) ICAI (2537) income tax (45) income tax act (509) income tax act 1961 (263)

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