Budget 2020-21 + FINANCE BILL, 2020

Withdrawal of exemption on certain perquisites or allowances provided to Union Pubic Services Commission (UPSC) Chairman and members and Chief Election Commissioner and Election Commissioners

Section 10 of the Act provides for exemption in respect of certain incomes and activities under specific circumstances. Clause (45) thereof, inserted by the Finance Act, 2011, provides that any allowance or perquisite as may be notified by the Central Government, paid to the serving/ retired Chairman or Members of UPSC shall not be included in computing their total income and hence shall be exempt from income-tax.

Further, vide Notification No. 49/2011 dated 6th September, 2011 bearing SO 2045(E), it was notified that in the case of serving Chairman and members of UPSC the following allowances and perquisites shall be exempt from income-tax for the purposes of clause (45) of section 10 of the Act, with effect from 1st April, 2008:

(i) the value of rent-free official residence;

(ii) the value of conveyance facilities including transport allowance;

(iii) the sumptuary allowance;

(iv) the value of leave travel concession provided to a serving Chairman or member of the UPSC and members of his family.

In the case of retired Chairman and members of UPSC, the said Notification states that the following allowances and perquisites shall be exempt from income-tax for the purposes of clause (45) of section 10 of the Act, with effect from 1st April, 2008:

(i) a sum of maximum of ₹ 14,000 per month for defraying the service of an orderly and for meeting expenses incurred towards secretarial assistance on contract basis;

(ii) the value of a residential telephone free of cost and the number of free calls to the extent of 1500 per month (overall and above the number of free calls per month allowed by telephone authorities).

Section 8 of the Election Commission (Conditions of Service of Election Commissioners and Transaction of Business) Act, 1991 which determines the conditions of service of the Chief Election Commissioner and other Election Commissioners, provides for income-tax exemption to the Chief Election Commissioner and other Election Commissioners on the value of rent-free residence, conveyance facilities, sumptuary allowance, medical facilities and other such conditions of service as are applicable to a Judge of the Supreme Court under Chapter IV of the Supreme Court Judges (Conditions of Service) Act, 1958 and the rules made thereunder.

It is proposed to remove these exemptions. Accordingly, it proposed to:

(i) delete cause (45) of section 10 of the Act;

(ii) amend section 8 of the Election Commission (Conditions of Service of Election Commissioners and Transaction of Business) Act, 1991, so as to delete the exemption from income-tax on value of rent-free residence, conveyance facilities, sumptuary allowance, medical facilities and other such conditions of service as are applicable to a Judge of the Supreme Court, paid to Chief Election Commissioner and other Election Commissioners.

These amendments will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-22 and subsequent assessment years.

[Clause 7]

 

 

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Budget 2020-21 + FINANCE BILL, 2020

Withdrawal of income-tax exemption for specified perquisites to UPSC and Election Commissioners, bringing those benefits into taxable income. The Finance Bill removes income-tax exemption for specified allowances and perquisites previously granted to serving and retired UPSC Chairmen and members and to the Chief Election Commissioner and Election Commissioners. Exemptions being withdrawn include rent-free residence, conveyance and transport allowances, sumptuary allowance, leave travel concession, post-retirement secretarial and telephone allowances, medical facilities and related service condition benefits, with the change to apply prospectively from the stated fiscal implementation point and to the subsequent assessment year.