The Finance Act, 2020, has introduced a new section 115BAC with effect from Assessment Year 2021-22.

This section provides an option to Individuals and HUF for payment of taxes at reduced tax rates subject to fulfilment of various conditions.

One of such conditions is assessee has to forego various exemption and deduction including exemption under section 10(14). However, CBDT was empowered to prescribe certain exemption under section 10(14) which can be availed by an assessee even if he has opted for section 115BAC.

In exercise of such powers, the CBDT has prescribed the following exemption which can be claimed by an assessee opting for section 115BAC:

1. Any allowance granted for meeting the cost of travel on tour or transfer [Rule 2BB(1)(a)];

2. Any allowance, whether, granted on tour or for the period of journey in connection with the transfer, to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty [Rule 2BB(1)(b)];

3. Any allowance granted for meeting the expenditure incurred on conveyance in performance of duties of an office or employment of profit if free conveyance is not provided by the employer; and

4. Transport allowance granted to an employee, who is blind or deaf and dumb or orthopedically handicapped with disability of lower extremities, to meet his expenditure to commute between the place of his residence and the place of his duty.

CBDT has further provided that while determining the value of perquisite, no exemption shall be available in respect of free food and non-alcoholic beverage provided by employer through a paid voucher