What is Conveyance Allowance?
Conveyance Allowance, also referred to as Transport Allowance, is provided by employers to their employees to compensate for their commute from residence to and from respective place of work. Allowances are usually provided to the workforce above their basic salary component and might or might not be taxable according to the Income Tax Act. Typically, conveyance allowance or transportation allowance is provided to employees only if there is no conveyance provided by the employer – no conveyance allowance is provided if an employer provides office transport. Under Section 10(14) of Income-tax Act, 1961 rules can be either of the below mentioned:
|Conveyance allowance for travelling from residence to office||Rs. 1,600 for each month or Rs. 19,200 for a year|
|For individuals who are physically challenged/differently abled (such as orthopedically handicapped people, dumb/deaf/blind), the conveyance allowance for commuting from residence to office||Rs. 3,200 for each month or Rs. 38,400 for a year|
|Conveyance allowance for employees of transport business for managing personal expenses during operating a transport service||Amount exempted will be lower of the below mentioned:|
Conveyance allowance, provided by employers to their employees for commuting from place of residence to place of work & vice-versa, is considered taxable if it exceeds the exemption limit. The exemption provided under Rule 2BB of Income Tax and section 10 sub-section 14(ii) of the Income Tax Act states the guidelines for conveyance allowance exemption – generally, exemption limit is Rs. 1,600 for a month or Rs. 19,200 per annum. Any amount which is paid on top of the conveyance/transport allowance limit is considered taxable and reported under the head ‘Income from Salaries’. Other special exemptions include the following:
Key features of Conveyance Allowance
Certain imperative features of the conveyance allowance are mentioned below:
Conveyance Allowance provided to Central Government Employees
A fixed conveyance allowance, per month, is granted by a proficient authority to any government official whose responsibilities need him/her to travel comprehensively. A conveyance allowance will be in lieu of all additional arrangements of travelling allowance for trips within the Government employee’s sphere of duty. A long-lasting travelling grant shall not be drawn during temporary transfer, leave, or joining time or, if otherwise specifically provided
Conveyance/Transport Allowances for Central Government Employees
|Average distance travelled during a month for official duty||For trip by own motor car||For trip by other means of travel|
|Between 201 - 300 km||Rs. 1,680||Rs. 556|
|Between 301 - 450 km||Rs. 2,520||Rs. 720|
|Between 451 - 600 km||Rs. 2,980||Rs. 960|
|Between 601 - 800 km||Rs. 3,646||Rs. 1,126|
|Distance travelled above 800 km||Rs. 4,500||Rs. 1,276|
Salary Structure and Conveyance Allowance
Below mentioned are two different tax structures for two different individuals – Rehan and Kabir
|Particulars||Salary structure for Rehan Amount (in Rs.)||Salary structure for Kabir Amount (in Rs.)|
|Basic salary||Rs. 4,50,000||Rs. 4,50,000|
|Travel allowance||Rs. 22,000||Rs. 13,000|
|Special allowance||Nil||Rs. 9,000|
|On basic salary – 5% of Rs. 2,00,000||Rs. 10,000||Rs. 10,000|
|On travel allowance||Rs. 140(5% on Rs. 2,800 (Rs. 22,000- Rs. 19,200))||Nil|
|On special allowance||Nil||Rs. 450|
|Total tax liability||Rs. 10,140||Rs. 10,450|
|Tax savings||Rs. 310 (due to correct CTC structuring)|
Conveyance Allowance – Frequently Asked Questions (FAQs)
How much exemptions can an individual claim on conveyance allowance?
Claim exemption under Section 10 – it is compulsory for citizens of India to prepare an income tax return each year 14(ii). Maximum exemption amount that can be claimed is Rs. 19,200 (Rs. 1,600 for each month)
Prior to April 2015, the exemption limit available on conveyance allowance was set at Rs. 800 for each month or Rs. 9,600 for an annum
Can the exemption limit be higher?
Yes, the exemption limit is different for people who are differently abled. People who are either orthopedically handicapped or blind are eligible to claim an exemption of Rs. 3,200 for each month, as compared to the standard exemption rate of Rs. 1,600 for each month
Does the conveyance allowance rate differ for central government employees?
Yes, conveyance allowance for central government employees is different. It can be divided into two categories:
If an organisation provides home-pick-and-drop/transportation service, is an employee still eligible for conveyance allowance?
No, conveyance allowance is provided to an employee if a business is providing transportation services to its employees