Income-tax (13th Amendment) Rules, 2020

Last updated: 30 June 2020

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The Central Board of Direct Taxes has introduced the Income-tax (13th Amendment) Rules, 2020. These rules, effective from 1st April 2021, amend the Income-tax Rules, 1962. Key changes include modifications to exemptions for employees who have opted for section 115BAC, specifically affecting allowances and free food/non-alcoholic beverages provided by employers.

MINISTRY OF FINANCE

(Department of Revenue)

(CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION

New Delhi, the 26th June, 2020

INCOME-TAX

G.S.R. 415(E).—In exercise of the powers conferred by sub-section (2) of section 115BAC read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules,1962, namely:‒

1. Short title and commencement: - (1) These rules may be called the Income-tax (13th Amendment) Rules, 2020.

(2) They shall come into force from the 1st day of April, 2021 and shall accordingly apply in relation to the assessment year 2021-22 and subsequent assessment years.

2. In the Income-tax Rules, 1962,-

(a) in rule 2BB, after sub-rule (2), the following sub-rule shall be inserted, namely:— “(3) Notwithstanding anything contained in sub-rule (1) and (2), an employee, being an assessee, who has exercised option under sub-section (5) of section 115BAC shall be entitled to exemption only in respect of the allowances mentioned in sub-clauses (a) to (c) of sub-rule (1) and at serial no.11 of the Table below sub-rule (2) to the extent and subject to the conditions, if any, specified therein.”;

(b) in rule 3, in sub-rule (7), in clause (iii), after the proviso, the following proviso shall be inserted, namely:—

“Provided further that the exemption provided in the first proviso in respect of free food and nonalcoholic beverage provided by such employer through paid voucher shall not apply to an employee, being an assessee, who has exercised option under sub-section (5) of section 115BAC.”.

[Notification No. 38/2020/F. No.370142/15/2020-TPL]

GUDRUN NEHAR, Director (Tax Policy and Legislation)

Note: The principal rules were published in the Gazette of India, Extraordinary, Part-II, Section-3, Sub-section (ii) vide number S.O. 969 (E), dated the 26th March, 1962 and last amended by the Income-tax (12th Amendment) Rules, 2020, vide notification number G.S.R. 338 (E) dated 29.5.2020

FAQ :

These rules are amendments made by the Central Board of Direct Taxes to the Income-tax Rules, 1962, in exercise of powers conferred by the Income-tax Act, 1961.

The Income-tax (13th Amendment) Rules, 2020, come into force from the 1st day of April, 2021.

These rules apply in relation to the assessment year 2021-22 and subsequent assessment years.

Employees who have exercised the option under sub-section (5) of section 115BAC are entitled to exemption only for specific allowances mentioned in the rules and are not eligible for exemption on free food and non-alcoholic beverages provided by their employer through paid vouchers.

Rule 2BB and Rule 3 of the Income-tax Rules, 1962, have been amended by inserting new sub-rules and provisos.

Notification No : Notification No 38/2020
Source : https://www.incometaxindia.gov.in/communications/notification/notification_38_2020.pdf

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