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.
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.
Here are some of the important features of travel allowance:
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.
Below listed is the Conveyance Allowance latest update for Central Government employees:
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.
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.
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.
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.
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