Tax Exemption for FY 2021 - Transport Allowance & LTC Cash Scheme

Ask the Community Income Tax
1

Hello

Have two questions here & looking for guidance on same:

Conveyance exemptions: Earlier conveyance / transport allowance was exempted up to Rs. 1,600/- pm which was discontinued after introduction of standard deduction. Whether this exemption is allowed for FY 2021 for those who have opted for new tax regime.

LTA exemption for FY 2021:
Recently LTC Cash Scheme was introduced for government employees. Whether the same is allowed for private sector employees as well? If yes, can we have details for the same along with appropriate notifications to communicate with employees.

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Hi @sneham95

You can claim tax exemption for:

  1. Transport allowances in case of a specially-abled person.
  2. Conveyance allowance received to meet the conveyance expenditure incurred as part of the employment.
  3. Any compensation received to meet the cost of travel on tour or transfer.
  4. Daily allowance received to meet the ordinary regular charges or expenditure you incur on account of absence from his regular place of duty.

LTC: Actually for private employees / companies there is no such announcement so far, but will update if I come to know some on this area.

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Thanks Dinesh. This means

  • Conveyance Allowance paid through monthly fixed salary (generally for commuting between office & residence), there is no default exemption upto Rs. 1,600/- pm under new regime

  • It can be considered exempted only if received to meet other expenditure incurred as part of employment i.e. generally business expenses / reimbursement & not part of fixed CTC

Thanks & Regards,

Hemant Karmalkar

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4

Yes!

“Any allowance granted to meet the expenditure incurred on conveyance in performance of duties of an office or employment of profit, provided that free conveyance is not provided by the employer”

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Hi Hemant Karmalkar,

Refer to this tweet & press release by the IT department for the notification:

https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1668609

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