**Report on Income-tax (15th Amendment) Rules, 2021**
**1. Executive Summary:**
This report analyzes the Income-tax (15th Amendment) Rules, 2021, as notified by the Central Board of Direct Taxes (CBDT) on May 5, 2021. This amendment modifies the Income-tax Rules, 1962, specifically focusing on the exemption related to Leave Travel Concession/Assistance (LTC) under Section 10(5) of the Income-tax Act, 1961. The key change introduces a provision allowing individuals to avail cash allowance in lieu of unutilized LTC for the block year 2018-2021, subject to specific conditions related to expenditure on goods and services attracting GST. The purpose is to provide relief to individuals and stimulate spending during the specified period affected by economic disruption.
**2. Introduction:**
This report aims to provide a detailed overview of the Income-tax (15th Amendment) Rules, 2021, based solely on the provided policy text. It outlines the amendment's purpose, key provisions, implications, and intended outcomes as can be inferred from the notification.
**3. Policy Overview:**
* **Original Policy:** The Income-tax Rules, 1962.
* **Core Objective(s):** To amend the Income-tax Rules, 1962, by introducing provisions related to the tax exemption for cash allowance received in lieu of Leave Travel Concession/Assistance (LTC).
**4. Background and Rationale:**
This amendment seems designed to address the situation where individuals were unable to utilize their LTC due to travel restrictions or other circumstances. The amendment allows them to receive a cash allowance instead, provided they spend the amount on specified goods and services liable to GST. This likely intends to encourage consumer spending and provide economic stimulus.
**5. Key Provisions / Changes:**
This amendment introduces sub-rules 1A and 1B to Rule 2B of the Income-tax Rules, 1962.
* **Specific Part Changed:** Rule 2B of the Income-tax Rules, 1962, is amended by adding new sub-rules after sub-rule 1.
* **New Rule/Provision (Sub-rule 1A):** For the assessment year beginning April 1, 2021, individuals can avail a cash allowance from their employer in lieu of unutilized LTC from the block of four calendar years commencing from 2018. The exemption is limited to the *lesser* of:
* Thirty-six thousand rupees per person (individual and family member).
* One-third of the specified expenditure.
This exemption is subject to the following conditions:
* The individual has exercised an option to avail exemption under the second proviso of clause 5 of section 10, in lieu of the exemption under clause 5 of section 10 in respect of one unutilised journey during the block of four calendar years commencing from the calendar year 2018;
* Expenditure is incurred on goods or services liable to tax at an aggregate rate of 12% or above under GST laws, purchased from GST-registered vendors or service providers.
* Payments are made through account payee cheque/bank draft, electronic clearing system, or other prescribed electronic modes (per Rule 6ABBA).
* A tax invoice is obtained from the registered person (vendor/service provider).
* **"Specified period"** means the period commencing from the 12th day of October, 2020 and ending on the 31st day of March, 2021.
Explanation 1 defines "tax invoice," "registered person," and "specified expenditure" with reference to the Central Goods and Services Tax Act, 2017.
Explanation 2 clarifies that the exemption is limited to thirty-six thousand rupees per person, for the individual and the member of his family, or onethird of the specified expenditure, whichever is less.
Explanation 3 states that clarifications issued by the Department of Expenditure, Ministry of Finance, vide OM F. No 1222020EII A Dated 12th October, 2020 and any subsequent clarifications, if any, issued in this regard shall apply *mutatis mutandis* to the exemption under this subrule.
* **New Rule/Provision (Sub-rule 1B):** Where an exemption under the second proviso to clause 5 of section 10 is claimed and allowed, subrule 2 shall have effect as if for the words "two journeys", the words "one journey" has been substituted.
* **Difference/Effect:** These changes provide a conditional exemption for cash allowance received in lieu of unutilized LTC. This provides flexibility to employees and intends to boost consumer spending. Sub-rule 1B reduces the number of journeys for the remaining block period.
**6. Target Audience and Stakeholders:**
The primary target audience includes:
* Salaried individuals eligible for Leave Travel Concession/Assistance (LTC).
* Employers who provide LTC to their employees.
* Businesses registered under GST, particularly those providing goods and services with a GST rate of 12% or higher.
* Tax consultants and professionals.
**7. Implementation Aspects (Inferred):**
* **Responsible Agency:** The Central Board of Direct Taxes (CBDT), Department of Revenue, Ministry of Finance is responsible for implementing these rules.
* **Timelines:** The amendment is deemed to have come into effect from April 1, 2021, and applies to the assessment year beginning on that date. The specified expenditure needs to be incurred between October 12, 2020, and March 31, 2021.
* **Procedures:** Employees need to exercise an option to avail exemption under the second proviso of clause 5 of section 10, in lieu of the exemption under clause 5 of section 10 in respect of one unutilised journey during the block of four calendar years commencing from the calendar year 2018, ensure payments are made through specified modes, and obtain tax invoices from registered vendors.
**8. Expected Outcomes / Impact of Changes:**
The intended outcomes of these changes are:
* Provide a tax benefit to employees who could not utilize their LTC due to restrictions.
* Stimulate consumer spending on goods and services attracting GST, thereby boosting economic activity.
* Ensure compliance with GST regulations by requiring purchases from registered vendors.
**9. Conclusion:**
The Income-tax (15th Amendment) Rules, 2021, introduce a conditional exemption for cash allowance received by employees in lieu of unutilized LTC. This amendment aims to provide relief to employees and stimulate economic activity by encouraging spending on GST-applicable goods and services. The success of this amendment depends on effective communication of the provisions to the target audience and seamless implementation by employers and tax authorities.
Key Entities Referenced
New Delhi: The city where the notification was issued.
Income-tax Act, 1961: The primary legislation being amended by the notification.
Central Board of Direct Taxes: The organization issuing the notification and responsible for amending the rules.
Income-tax Rules, 1962: The rules being amended by this notification.
Income tax 15th Amendment, Rules, 2021: The title of the amendment rules.
Central Goods and Services Tax Act, 2017: A law referenced in the explanation of the amended rules, specifically regarding tax invoices and registered persons.
Department of Expenditure, Ministry of Finance: The department that issued clarification OM F. No 1222020EII A Dated 12th October, 2020 that applies to the exemption under this subrule.
KAMLESH CHANDRA VARSHNEY: Jt. Secy. Tax Policy and Legislation
रजजस्ट्री स.ं डी.एल.- 33004/99 REGD. No. D. L.-33004/99
xxxGIDHxxx
सी.जी.-डी.एलxx.x-GअID.-E0x5xx0 52021-226843
CG-DL-E-05052021-226843
ऄसाधारण
EXTRAORDINARY
भाग II—खण् ड 3—ईप-खण्ड (i)
PART II—Section 3—Sub-section (i)
प्राजधकार स ेप्रकाजित
PUBLISHED BY AUTHORITY
स.ं 254] नइ ददल्ली, बधु िार, मइ 5, 2021/ििै ाख 15, 1943
No. 254] NEW DELHI, WEDNESDAY, MAY 5, 2021/VAISAKHA 15, 1943
जित्त मंत्रालय
(राजस्ट्ि जिभाग)
(केन्द्रीय प्रत्यक्ष कर बोड)ड
ऄजधसचू ना
नइ ददल्ली, 5 मइ, 2021
(अय-कर)
सा.का.जन. 320(ऄ)—केंरीय प्रत्यक्ष कर बोड,ड अय-कर ऄजधजनयम, 1961 (1961 का 43) की धारा 295 के
साथ पठित धारा 10 के खडं (5) द्वारा प्रदत्त िजियों का प्रयोग करत े हुए, अय-कर जनयम, 1962 का और संिोधन करन े
के जलए जनम्नजलजखत जनयम बनाता है, ऄथाडत ् :-
1. सजं क्षप्त नाम और प्रारंभ--(1) आन जनयमों का संजक्षप्त नाम अय-कर (पंरहिा ं सिं ोधन) जनयम, 2021 ह।ै
(2) य े1 ऄप्रलै , 2021 से प्रिृत्त हुए समझे जाएंग े ।
2. अय-कर जनयम, 1962 के जनयम 2ख के ईपजनयम (1) के पश्चात् जनम्नजलजखत ईपजनयम ऄंतःस्ट्थाजपत दकए
जाएंगे, ऄथाडत ्:--
“(1क) 1 ऄप्रैल, 2021 से प्रारंभ होने िाले जनधाडरण िर्ड के जलए, जहां ईपजनयम (1) में जनर्ददष्ट दकसी व्यजष्ट न े
ऄपन े जनयोिा से दकसी यात्रा ठरयायत या सहायता के बदले दकसी नकद भत्ते का लाभ जलया ह ै तो धारा 10 के
खंड (5) के दसू रे परंतुक के ऄधीन छूट प्राप्त रकम जनम्नजलजखत ितों को परू ा करने के ऄधीन रहते रकम व्यजष्ट के
2475 GI/2021 (1)2 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(i)]
जलए और ईसके कुटुंब के सदस्ट्य के जलए प्रजत व्यजि छत्तीस हजार रुपए से ऄनजधक या जिजनर्ददष्ट व्यय का एक
जतहाइ, आनमें से जो भी कम हो, होगी, ऄथाडत् :--
(i) व्यजष्ट ने कैलडें र िर् ड 2018 से प्रारंभ होकर चार कैलेंडर िर् ड के ब्लॉक के दौरान ईपयोग न की गइ एक
यात्रा के संबंध में धारा 10 के खंड (5) के ऄधीन छूट के बदले धारा 10 के खंड (5) के दसू रे परंतुक के
ऄधीन छूट का लाभ लेन े के जिकल्प का ईपयोग दकया ह ै;
(ii) जिजनर्ददष्ट व्यय के संबंध म ें संदाय व्यजष्ट या ईसके कुटुंब के दकसी सदस्ट्य द्वारा जिजनर्ददष्ट ऄिजध के दौरान
दकसी रजजस्ट्रीकृत व्यजि को दकया गया ह ै;
(iii) जिजनर्ददष्ट व्यय के संबंध में संदाय दकसी बैंक पर अहठरत खाता देय चैक या खाता देय बैंक ड्राफ्ट या दकसी
बैंक खात े के माध्यम स े आलैक्ट्राजनक समािोधन प्रणाली या ऐसे ऄन्द्य आलैक्ट्राजनक ढंग से दकया जाता है,
जैसा दक जनयम 6कखखक के ऄधीन जिजनर्ददष्ट दकया गया ह ै;
(iv) व्यजष्ट खंड (ii) में जनर्ददष्ट रजजस्ट्रीकृत व्यजि स ेजिजनर्ददष्ट व्यय के संबंध में कर बीजक ऄजभप्राप्त करता ह ै।
स्ट्पष्टीकरण 1—आस ईपजनयम के प्रयोजन के जलए,--
(i) ‘कर बीजक’ से केंरीय माल और सेिाकर ऄजधजनयम, 2017 (2017 का ऄजधजनयम संखयांक 12) की
धारा 31 के ऄधीन रजजस्ट्रीकृत व्यजि द्वारा जारी दकया गया बीजक ऄजभप्रेत ह ै;
(ii) ‘रजजस्ट्रीकृत व्यजि’ का िही ऄथड होगा, जो ईसका केंरीय माल और सेिाकर ऄजधजनयम, 2017 (2017
का ऄजधजनयम संखयांक 12) की धारा 2 के खडं (94) में ह ै;
(iii) ‘जिजनर्ददष्ट व्यय’ से दकसी व्यजष्ट या ईसके कुटुंब के सदस्ट्य द्वारा जिजनर्ददष्ट ऄिजध के दौरान माल या
सेिाओं, जो बारह प्रजतित या ईससे ऄजधक की कुल दर पर माल और सेिाकर (जीएसटी) जिजधयों के
ऄधीन कर से प्रभाय ड ह,ैं पर ईपगत व्यय ऄजभप्रेत ह ै और क्रय दकया गया माल का क्रय या सेिाओं की
ईपाजप्त दकसी जीएसटी रजजस्ट्रीकृत जिक्रेताओं या सेिा प्रदाताओं से की गइ ह ै ;
(iv) ‘जिजनर्ददष्ट ऄिजध’ से 12 ऄिूबर, 2020 को प्रारंभ होने िाली और 31 माचड, 2021 को समाप्त होने
िाली ऄिजध ऄजभप्रेत ह ै।
स्ट्पष्टीकरण 2—िंकाओं को दरू करन े के जलए यह स्ट्पष्ट दकया जाता ह ै दक दकसी व्यजष्ट द्वारा, ईसके जनयोजन के
जनबंधनों के ऄनुसार प्राप्त रकम या ईसको ईसके और कुटुंब के सदस्ट्य के संबंध में ईसके जनयोिा से जिजनर्ददष्ट व्यय
के संबंध म ेंदेय रकम व्यजष्ट और ईसके कुटुंब के सदस्ट्य के जलए प्रजत व्यजि छत्तीस हजार रुपए से ऄजधक ह,ै तो आस
ईपजनयम के ऄधीन छूट व्यजि और ईसके कुटुंब के सदस्ट्य के जलए प्रजत व्यजि छत्तीस हजार रुपए तक या
जिजनर्ददष्ट व्यय के एक-जतहाइ तक, आनमें से जो भी कम हो, जनबंजधत होगी ।
स्ट्पष्टीकरण 3—यह स्ट्पष्ट दकया जाता ह ै दक व्यय जिभाग, जित्त मंत्रालय द्वारा कायड ज्ञापन एफ सं. 12(2)/2020-
इII(ऄ), तारीख 12 ऄिूबर, 2020 और कोइ पश्चातिती स्ट्पष्टीकरण, यदद कोइ हों, जो आस संबंध म ें जारी दकए
गए ह,ैं यथािश्यक ईपांतरणों सजहत आस ईपजनयम के ऄधीन छूट को लाग ूहोंग े।
(1ख) जहां धारा 10 के खंड (5) के दसू रे परंतुक के ऄधीन दकसी छूट का दािा दकया जाता ह ै और ऄनुज्ञा
की जाती ह,ै ईपजनयम (2) का ऐसे प्रभाि होगा मानो ‘दो यात्राए’ं िब्दों के स्ट्थान पर ‘एक यात्रा’ िब्द रख
ददए गए हों ।”।
[ऄजधसूचना सं. 50/2021/फा.स.ं 370142/14/2021-टीपीएल]
कमलेि चंर िार्ष्णेय, संयुि सजचि (कर नीजत और जिधान प्रभाग)
स्ट्पष्टीकारक ज्ञापन : यह स्ट्पष्ट दकया जाता ह ै दक आन जनयमों को भूतलक्षी प्रभाि देने स े कोइ व्यजि प्रजतकूल रूप स े
प्रभाजित नहीं हो रहा ह ै।[भाग II—खण् ड 3(i)] भारत का राजपत्र : ऄसाधारण 3
ठटप्पण : मूल जनयम, भारत के राजपत्र, ऄसाधारण, भाग II, खंड 3, ईपखंड (ii) में ऄजधसूचना सं. का.अ. 969(ऄ)
तारीख 26 माच,ड 1962 द्वारा प्रकाजित दकए गए थ े और ईनका ऄंजतम संिोधन ऄजधसचू ना सं. सा.का.जन
318(ऄ) तारीख 4 मइ, 2021 द्वारा दकया गया ।
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 5th May, 2021
(INCOME-TAX)
G.S.R. 320(E).—In exercise of the powers conferred by clause (5) of section 10 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 (15th Amendment),
Rules, 2021.
(2) They shall be deemed to have come into force from the 1st day of April, 2021.
2. In the Income-tax Rules, 1962, in rule 2B, after sub-rule (1), the following sub-rules shall be inserted,
namely:—
“(1A) For the assessment year beginning on the 1st day of April, 2021, where the individual referred to in
sub-rule (1) avails any cash allowance from his employer in lieu of any travel concession or assistance, the amount
exempted under the second proviso to clause (5) of section 10 shall be the amount, not exceeding thirty-six thousand
rupees per person, for the individual and the member of his family, or one-third of the specified expenditure,
whichever is less, subject to fulfilment of the following conditions, namely:-
(i) the individual has exercised an option to avail exemption under the second proviso of clause (5) of section
10, in lieu of the exemption under clause (5) of section 10 in respect of one unutilised journey during the
block of four calendar years commencing from the calendar year 2018;
(ii) the payment in respect of the specified expenditure is made by the individual or any member of his family to
a registered person during the specified period;
(iii) the payment in respect of the specified expenditure is made by an account payee cheque drawn on a bank or
account payee bank draft, or use of electronic clearing system through a bank account or through such other
electronic mode as prescribed under rule 6ABBA; and
(iv) the individual obtains a tax invoice in respect of specified expenditure from the registered person referred in
clause (ii).
Explanation 1- For the purpose of this sub-rule,-
(i) „tax invoice‟ means an invoice issued by the registered person under section 31 of the Central Goods and
Services Tax Act, 2017 (No. 12 of 2017);
(ii) „registered person‟ shall have the meaning assigned to it in clause (94) of section 2 of the Central Goods and
Services Tax Act, 2017 (No. 12 of 2017);
(iii) „specified expenditure‟ means expenditure incurred by an individual or a member of his family during
specified period on goods or services, which are liable to tax at an aggregate rate of twelve per cent. or above
under various Goods and Services Tax (GST) laws and goods are purchased or services procured from GST
registered vendors or service providers;
(iv) „specified period‟ means the period commencing from the 12th day of October, 2020 and ending on the
31stday of March, 2021.4 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(i)]
Explanation 2 For the removal of doubt, it is hereby clarified that if the amount received by or due to an individual,
as per the terms of his employment, from his employer in relation to himself and member of his
family, in connection with the specified expenditure is in excess of the thirty six thousand rupees per
person, for the individual and the member of his family, the exemption under this sub-rule would be
restricted to thirty-six thousand rupees per person, for the individual and the member of his family, or
one-third of the specified expenditure, whichever is less.
Explanation 3 It is hereby clarified that the clarification issued by the Department of Expenditure, Ministry of
Finance, vide OM F. No 12(2)/2020-EII (A) Dated 12th October, 2020 and any subsequent
clarifications, if any, issued in this regard shall apply mutatis mutandis to the exemption under this
sub-rule.
(1B) Where an exemption under the second proviso to clause (5) of section 10 is claimed and allowed, sub-rule
(2) shall have effect as if for the words „two journeys‟ , the words „one journey‟ has been substituted.”.
[Notification No. 50/2021/F. No.370142/14/2021-TPL]
KAMLESH CHANDRA VARSHNEY, Jt. Secy. (Tax Policy and Legislation)
Explanatory Memorandum: It is hereby certified that no person is being adversely affected by giving retrospective
effect to these rules.
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 vide notification number G.S.R.
318(E) dated 4th May, 2021.
Uploaded by Dte. of Printing at Government of India Press, Ring Road, Mayapuri, New Delhi-110064
and Published by the Controller of Publications, Delhi-110054.