As a part of the cost-to-company, employers include certain allowances such as conveyance allowance, entertainment allowance, leave travel allowance (can be claimed twice in a block of four years), etc.
At a time when most people are looking at salary cuts, and possibly job losses, due to the pandemic, a Times of India news story talks of how they may end up paying higher taxes for no fault of their own; indeed, this is a peculiarity caused by the pandemic, and the fact that is forcing people to stay at home. As a part of the cost-to-company, apart from basic salary and house rent allowance (HRA), employers include certain allowances such as conveyance allowance, entertainment allowance, leave travel allowance (can be claimed twice in a block of four years), etc. Employees have to submit bills as proofs for the amounts spent on these allowances to reduce their tax liabilities.
But, how do you produce bills for conveyance or entertainment when you are at home and haven’t even ordered food from outside? How do you travel, and, if you don’t, you can’t submit bills for this either? Even though the number may be limited, some may even have given up their rented accommodation and perhaps moved in with friends and family; this makes submitting HRA bills impossible. So when the employees get their HRA or LTA or other allowances, since they can’t submit any bills, these will be taxed as regular income; the new tax slabs introduced this year remove many of the deductions, but for most, opting for the older tax structure is more beneficial. Ideally then, for this year, the taxman should allow people to claim deductions without submitting bills as proof; the same benefit can be given by raising the standard deduction amount.