Experts say this could lead to recovery
Finance Ministry has said that government employees will not get transport allowance for the months during lockdown. Transport Allowance (TA) is given to compensate the cost incurred on account of commuting between residence and office.
Further, employees, who could not attend office and worked from home in a whole calendar month, are not eligible to get this allowance.
Office car facility
Physically-disabled employees and pregnant women employees who were exempted to attend office will not get TA. It has also been clarified that non-entitled officers/officials, who are temporarily provided with facility of official car for commuting between office and residence throughout the whole calendar month on account of non-availability of public transport facility due to Covid-19 pandemic are also not eligible to draw TA.
According to the Seventh Pay Commission, employees are eligible to get TA — between at rate of ₹900 plus dearness allowance to ₹7,200 plus dear allowance — depending upon cities they are based and on the basis of their grade. However, those who avail government transport are not eligible for this allowance.
Experts feel wording of the Memorandum has number of ambiguities and can create problem for over 48 lakh central government employees. Though this will not have any impact on tax liability, but this could result in recovery.
Effect on Income Tax
According to Divakar Vijayasarathy, Founder & Managing Partner at DVS Advisors, this is applicable only for central government employees and hence, does not have an impact on private-sector employees. Besides, it is limited only to restricting payment of TA for the lockdown period and does not amend the Income Tax Act, 1961.
Under the Act, exemption of TA and other specified allowances were withdrawn with effect from April 1, 2019 and consequently replaced with a standard deduction of ₹50,000. Thus, irrespective of this Memorandum, the standard deduction of ₹50,000 shall continue to be available for central government employees.
“The Office Memorandum for TA pertaining to April and May, would create complications since if it has already been paid, the same has to be recovered. Further, it uses the word “entire calendar month” and even if the employee has commuted to the office for one day in a month, they would still be eligible for the TA. There would be certain ambiguities that would still persist,” he said.