Conveyance Allowance in India

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:

• Allowance allowed to a staff member to meet his/her expenses in order to travel between his office and place of residence
• Allowance provided to a staff member operating a transport business, to manage his/her private expenditure, during their responsibility performed in the course of operating such a moving from one place to another, provided an employee is not receiving a day-to-day stipend/allowance

Description	Allowance
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: 70% of such allowance; Rs. 10,000 for a month

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:

• The exemption limit for differently abled (blind people etc.) or orthopedically handicapped is Rs. 3,200 for each month
• According to section 10(45), the conveyance/transport allowance provided to associates of Union Public Service Commission (UPSC) or chairman is not charged to tax

Key features of Conveyance Allowance

Certain imperative features of the conveyance allowance are mentioned below:

• Businesses providing transport facilities to their staffs do not provide conveyance allowance
• Conveyance allowance can be put together with additional allowances like special allowance
• For all salaried persons, the exemption limit is set at Rs. 1,600 for each month
• Salaried persons are not required to furnish any receipts or bills in order to receive conveyance allowance
• The amount offered as conveyance allowance can differ from business to business. Yet, the exemption limit is standard for all – Rs. 1,600 for each month

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
Tax computation
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:

• Central government employees who commute using their own vehicle such as motor car are provided Rs. 1,680 if the distance travelled is between 201 kilometres and 300 kilometres; Rs. 2,520 if travel distance is between 301 kilometres and 450 kilometres, Rs. 2,980 if travel distance travelled is between 451 kilometres and 600 kilometres; Rs. 3,646 if travel distance is between 601 kilometres and 800 kilometres; Rs. 4,500 if travel distance is in excess of 800 kilometres
• Central government employees who commute through public transport are provided Rs. 556 if the travel distance is between 201 kilometres and 300 kilometres; Rs. 720 if the travel distance is between 301 kilometres and 450 kilometres; Rs. 960 if the travel distance is between 451 kilometres and 600 kilometres, Rs. 1,126 if the travel distance is between 601 kilometres and 800 kilometres; Rs. 1,276 if the travel distance is in excess of 800 kilometres

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