Transport Allowance or Conveyance Allowance is a part of the salary structure which is given to the employees by the employer to compensate for travel expenses incurred while commuting between workplace and residence. This part of allowance is provided only when an employer does not provide pick and drop facility to its employee.
Taxable Factor of Conveyance Allowance
Conveyance Allowance of up to Rupees 19,200 per annum or Rupees 1,600 per month is exempted from being taxed under Section 10 (14) (ii) of Income Tax Act and Rule 2BB of Income Tax Rules. Earlier, the Conveyance Allowance Tax exemption was Rupees 800 per month but it was later revised in 2015 to benefit middle-class taxpayers in India. For availing Conveyance Allowance an employee is not required to furnish any document as proof to the employer.
How is Conveyance Allowance Calculated?
There are no complicated calculations for calculating the limit of Conveyance Allowance. The limit set is the same for all salaried employees and it has no relevance with an employee’s tax bracket. In some cases, the Conveyance Allowance amount can be combined with some other allowances, like with Special Allowance.
For example, if an employer is providing a Special Allowance of Rupees 5,000 per month (which is 100% taxable), out of the total of Rupees 5,000, Rupees 1,600 can be allotted as the Conveyance Allowance, upon which tax exemptions can be claimed. It is however highly advisable to consult a tax expert before proceeding with the tax exemption claim on Transport Allowance.
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Special Conveyance Allowance for Individuals with Disabilities
Individuals who have disabilities associated with orthopedic conditions are eligible to avail Transport Allowance which is quite different from the normal Conveyance Allowance allotted to the general employee. For the general employee, the Conveyance Allowance is usually half of that given to individuals with disabilities.
Frequently Asked Questions
Q. What is the maximum limit of Conveyance Allowance?
Depending on the company type, an employer can offer Conveyance Allowances to its employees without any consideration to limit. But under the Income Tax Act, there is an exemption limit of the Conveyance Allowance with the remaining amount falling under taxable income.
Q. Can one claim for the Rupees 1600/- per month benefit if his/her company provides cab facilities to employees?
No, an employee cannot claim for Conveyance Allowance benefits if the company offers pick and drop facilities. The benefit is specially not applicable if the employee utilizes his/her company’s cab transport.
Q. Will an employee be eligible for Conveyance Allowance benefits if his/her Company provides fuel reimbursement?
No, if the company offers fuel reimbursement then the employee cannot claim TA benefits, even if he/she commutes between workplace and residence via his/her own vehicle.