Conveyance Allowance is often referred as Transportation Allowance or Travel Allowance. Employers offer this allowance to their employees to cover the cost of commuting from their residence to the workplace, and back. This allowance is an additional amount over and above the basic salary. Depending on the Conveyance allowance amount the company offers, it could be taxable or not under the Income Tax Act of India.
- Firms that offer this type of allowance usually do not provide transportation facilities to their employees.
- The employer does not provide travel allowance in case transportation services are provided to the employees.
- This is irrespective of whether the employee opts or opts out from availing the company-provided transportation facility.
In the following post, we will discuss the Conveyance Allowance features, tax exemptions, special exemptions, travel allowance for Central Government employees, consolidated travel allowance, calculation of this allowance, and FAQs.
Features of Conveyance Allowance
Here are some of the important features of travel allowance:
- For all salaried individuals, the tax exemption limit for this allowance is Rs. 1,600 per month. This limit is uniform, despite employers providing lower or higher amounts for transportation allowance.
- Individuals do not have to submit receipts or bills of their travel to claim the travel allowance.
- At times, Conveyance allowance is grouped with other allowances such as the Special Allowance.
- The travel allowance amount provided to employees vary from one company to another. The amount provided could be higher or lower than Rs. 1,600.
- Firms offering transportation service to the employees do not provide this allowance.
Conveyance Allowance Exemption
There is no limit as to how much transportation allowance a company wants to offer to the employees But, there is a cap on the Conveyance Allowance amount for tax relief under the Income Tax Act.
- The tax exemption limit for this allowance is Rs. 19,200 a year (Rs. 1,600 per month) under Section 10(14) of the Income Tax Act and Rule 2BB of Income Tax Rules.
- Earlier to April 2015, the tax exemption limit was Rs. 9,600 per year (Rs. 800 per month).
- The Government of India thereafter revised this limit to the current amount to reduce the tax burden on salaried people.
Provision for Special Exemption
- The Conveyance Allowance given to UPSC members is completely exempted of any tax under the Section 10(45).
- The exemption limit is higher (up to Rs. 3,200 per month) for salaried people who are blind or orthopedically handicapped.
Update on Conveyance Allowances for Central Government Employees
Below listed is the Conveyance Allowance latest update for Central Government employees:
|On Official Duty (Average Monthly Travel)
||Travel by Own Car
||Travel by Other Transportation Modes
|201 to 300 km
|301 to 450 km
|451 to 600 km
|601 to 800 km
|More than 800 km
Consolidated Travelling Allowance
Consolidated Travel Allowance substitutes other types of transportation allowances for commute in the government official’s limits of duty. Any employee working for a government body, and must travel for work, can receive a consolidated travelling allowance. This is provided by a competent authority.
- Even if the official is available at the headquarters, the employee can draw a permanent travelling allowance all the year round.
- But the employee cannot draw this benefit during joining time, temporary leave or transfer, unless specially provided in the chapter rules for that period when transportation allowance of any type is drawn.
How to Calculate Conveyance Allowance?
The Conveyance Allowance calculation is simple. You can avail tax exemption for this expense up to Rs. 1,600 per month. But this does not mean that the employer must pay you only Rs. 1,600 as transportation allowance. The employer can offer a lower or high travel allowance limit as per its discretion. But the limit to which tax exemptions can be claimed under this allowance is fixed up to Rs. 19,200 per year.
- For instance, the travel allowance for a month offered by the employer is Rs. 2,500.
- Given the Conveyance Allowance tax exemption limit, you need to pay tax (if applicable) on Rs. 2,500 – Rs. 1,600 = Rs. 900.
How to calculate Conveyance Allowance if you receive a Special Allowance?
Sometimes the travel allowance is grouped with Special Allowance. This allowance is fully taxable with no partial tax relief. In this case, you can claim travel allowance exemption separately to substitute Rs. 1,600 out of the total Special Allowance.
- For instance, the Special Allowance for the month is Rs. 5,000.
- In such a case, you can claim exemption for Rs. 1,600 under Conveyance Allowance.
- The taxable amount in such a case is Rs. 5,000 – Rs. 1,600 = Rs. 3,400.
Frequently Asked Questions about Conveyance Allowance
Here are the Conveyance Allowance FAQs:
Partially taxable allowances are exempt from tax up to a certain limit only. According to the changes in Income Tax regulations and rules, this limit can be kept constant or revised in budget sessions. Conveyance Allowance is one of the partially taxable allowance, which has undergone revisions over years. Apart from this allowance, a few other partially taxable allowances are Medical Allowance, HRA (House Rent Allowance), etc.
You can claim the Conveyance Allowance exemption under Section 10(14(ii)) of the Income Tax Act. The maximum limit for the exemption is Rs. 1,600 per month, i.e. Rs. 19,200 in a year.
A higher exemption limit for transport allowance is available to employees who are orthopedically handicapped or blind. The maximum exemption for such salaried employees is Rs. 3,200 per month instead of Rs. 1,600 per month. Thus, in a year, the exemption limit for these individuals is up to Rs. 38,400 instead of Rs. 19,200.
The Conveyance or Transport allowance is applicable only if the company does not offer transportation service to employees from residence to workplace, and vice-versa. This is irrespective of the employee opting for the company-provided transportation service or not. If the organization provides transportation to employees from home to workplace, and back, then the Transportation Allowance section will not be there in the salary slip.
The Conveyance Allowance limit saw a revision in 2015. Before April 2015, the exemption limit for tax regarding this allowance was fixed to Rs. 800 per month, i.e. Rs. 9,600 per year. However, the tax exemption limit as later expanded for the benefit of taxpayers.
- Before April 2015, only handicapped people used to receive Rs. 1,600 per month as travel allowance.
- But in Budget 2015, this tax exemption limit for Conveyance Allowance was extended to regular salaried individuals. Thus, the limit was raised to Rs. 1,600 from Rs. 800 per month.
- Also, the limit was revised from Rs. 1,600 to Rs. 3,200 per month for blind and orthopedically challenged employees.
The Conveyance allowance for the transport business employees to meet their personal expenses during the run of such travels are mentioned below:
- Rs. 10,000 per month or
- 70% of such allowance
- But to avail this exemption, the employee should not be provided with a daily allowance from the employer.