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Introduction: 

Companies typically offer special allowances to employees as a gesture of appreciation for exceptional performance. These are included as part of their salary to offset expenses related to official duties. Additionally, they often come with tax benefits that employees can leverage when filing their returns.

One prevalent type of special allowance that organizations offer is the . If you receive this benefit as part of your salary, continue reading this article to learn about the conveyance allowance exemption limit, how to calculate it, and other relevant details.

Conveyance Allowance: 

Conveyance allowance, also referred to as transport allowance, is a special benefit provided by companies to cover the commuting expenses of their employees traveling to and from their workplace.

Typically offered in addition to their basic pay, conveyance allowances are eligible for tax deductions up to a specified limit. Eligibility for is generally reserved for employees who do not have employer-provided transportation arrangements and often varies based on the employee’s position within the organization.

Conveyance Allowance Features:

Here are some key features of transportation allowance:

• The conveyance allowance in salary may vary from one company to another, but the tax exemption limit remains consistent across all organizations.

• Companies often combine with other allowances, which are provided in addition to the employee’s basic salary.

• Companies provide conveyance reimbursement to employees when they do not offer any transportation facilities. Additionally, if an employee opts not to use the provided facilities, they are eligible to receive a conveyance allowance.

• Employees are eligible for this allowance even without having to provide travel receipts.

• Some companies provide consolidated travel allowances to employees whose job descriptions involve frequent travel.

Calculating Conveyance Allowance in Your Salary:

• There is no fixed formula for determining the exact deduction for within a financial year. As a salaried individual, you can claim a maximum relief of Rs 1,600 per month or Rs 19,200 annually, which can be subtracted from your taxable income during calculations.

• If you receive additional special allowances, you can combine them with your conveyance benefit to qualify for tax deductions.

• For example, if you receive Rs 6,000 per month as a special allowance, you can incorporate Rs 1,600 per month of conveyance allowance with other special allowances to utilize the entire amount as an exemption. Nevertheless, it is always prudent to seek advice from a tax professional before proceeding with this approach.

Exemption Limit:

• Under Section 10(14)(ii) of the Income Tax Act and Rule 2BB of the Income Tax Rules, salaried individuals can avail a exemption of up to Rs 1,600 per month or Rs 19,200 per annum within a financial year.

• Currently, there is no restriction for employers on the conveyance allowance amount they offer to employees. Additionally, the allowance sum will differ among companies. However, the exemption amount remains consistent across all cases.

• For visually impaired or orthopedically handicapped individuals, the conveyance allowance tax exemption limit is Rs 3,200 per month.

• As per Section 10(45) of the Income Tax Act, members of the UPSC are exempt from paying taxes on conveyance allowance.

• As per the rules of the Central Board of Direct Taxes (CBDT), employees are not required to provide any documents related to this matter when filing their income tax returns.

Consolidated Travel Allowances:

• Consolidated travel allowances are typically provided to government employees who frequently travel for work, particularly for outstation trips related to office duties. Additionally, these allowances serve as substitutes for other travel allowances for commuting within government officials’ duty limits.

• Moreover, a government employee can claim travel compensation throughout the year, even when not reporting at the headquarters. However, withdrawals are not permitted during temporary transfers or leave periods.

Conclusion:

Now that you’re aware of the conveyance allowance exemption limit, you can choose to claim the exemption accordingly when filing your returns. Moreover, this tax relief is accessible regardless of whether you’re filing under the old or the new tax regime.