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Conveyance Allowance

Conveyance Allowance Meaning

Last Updated 14th Jun 2021

  • Conveyance allowance is given to the salaried employees who do not get transport facility from their employer
  • The tax exemption limit is up to ₹ 1,600 per month or ₹ 19,200 per year for salaried individuals.
  • Blind or orthopaedically disabled individuals can claim up to ₹ 3,200 per month or ₹ 38,400 per year.
  • UPSC members are also not required to pay any tax on the conveyance allowance.
  • Employees seeking tax exemption don’t have to provide the official bills.
INCOME TAX CALCULATOR

Conveyance Allowance in India

Like the rest of the world, employers in India also offer their staff multiple allowances. One such perk is given in the form of Conveyance Allowance to compensate for the travel from work to home and vice versa. This allowance is given along with the basic pay. Employers extend this allowance if there is no transportation facility offered by the firm. And conveyance allowance is taxable if it goes beyond the exemption limit.

Companies provide a compensation amount to their employees called Conveyance allowance/Transport Allowance to travel from their residence to their office location. Allowances usually are available to the employees as a basic portion of their wages that can be taxable in compliance with the Income Tax Act or not. Besides, a conveyance allowance is paid by an employer only if the employer does not offer transportation facility to his/her employees. If an employer provides workplace travel, it will not provide its employees with a conveyance allowance.

How to Calculate Conveyance Allowance?

Calculating the conveyance allowance is very easy. The conveyance allowance limit is ₹ 1,600/month or ₹ 19,200/year regardless of the individual’s tax bracket. Another critical point is that conveyance allowance is grouped with other benefits offered by the employer. It means you can replace ₹ 1,600 for conveyance allowance and claim tax deductions if your company gives you a taxable monthly extra allowance of ₹ 5,000. Consult your tax consultant before moving ahead.

Conveyance Allowance Limit for FY 2020 - 2021 & AY 2021 - 2022

Companies can offer any amount of transportation allowance; there is no specific limit on it. Although, as described above, there is a limit (₹ 1,600/month or ₹ 19,200/year) on the conveyance allowance exemption under the Income Tax Act.

Conveyance Allowance Exemption

Conveyance allowance exemption is allowed up to ₹ 19,200/year or ₹ 1,600/month regarding section 10(14)(ii) of Income Tax Act and Rule 2BB of the Income Tax Regulations.

Earlier, the conveyance allowance exemption was limited at ₹ 800/month or ₹ 9,600/year. To offer fiscal benefits to the middle-class taxpayers, the government increased the conveyance allowance limit in the 2015 Union budget to ₹ 1,600 or ₹ 19,200 per year.

Exemption seekers don’t have to provide any official documents from their employers to claim conveyance allowance exemption. They can claim tax exemption of ₹ 1,600/month as a travel and conveyance allowance.

There are few exceptions of conveyance allowance exemption cases such as the conveyance allowance limit is ₹ 3,200/month for blind or orthopaedically disabled people. UPSC members are also exempted from paying tax on conveyance allowance under Section 10(45) of the Income Tax Act.

Features of Conveyance Allowance

Conveyance allowance's essential characteristics:

  • The conveyance allowance limit allowed for all salaried professionals is ₹ 1,600/month or ₹ 19,200 annually).
  • Conveyance allowance is not available to the employees working in the companies who provide travel facilities.
  • The employer’s travel allowance can vary depending on the company or employee designation, but the conveyance allowance exemption is allowed ₹ 1,600/month or ₹ 19,200 annually.
  • Employees also don't have to provide vouchers or bills to claim the conveyance allowance exemption.
  • Other deductions, for example, a special allowance, can be clustered together with travel conveyance allowance. In any case, the employees can replace ₹ 1,600/month as a conveyance allowance and claim tax exemption if the employer gives a separate completely taxable conveyance allowance.
  • Some companies may award the employee a consolidated travel allowance for an employee who travels frequently. It is given instead of a transportation allowance, or any travel allowance and employees cannot claim this allowance during vacation, temporary transition and so forth.

Consolidated Travelling Allowance

Authorities may offer a permanent travel allowance monthly to a government employee whose responsibilities warrant frequent travel. This allowance and all other types of travel allowances in the sphere of service of the official may be drawn during the year, whether or not the government servant is away from his/her office. During leave, temporary transfer, or entry, or as otherwise explicitly specified in the rules in this clause, individuals cannot withdraw a consolidated travel allowance for any time for which any other form of travel allowance is drawn.

Conveyance Allowances to Central Government Employees

On duty average monthly travel By own car By other modes of conveyance
201 to 300 km ₹ 1,680 ₹ 556
301 to 450 km ₹ 2,520 ₹ 720
451 to 600 km ₹ 2,980 ₹ 960
601 to 800 km ₹ 3,646 ₹ 1,126
800 km + ₹ 4,500 ₹ 1,276

FAQs

How much is the conveyance allowance?

You can claim tax exemption up to ₹ 19,200/year or ₹ 1,600/month under section 10(14(ii) of the Income Tax Act.

Is conveyance allowance exempt from income tax?

Regardless of the income slab, you can avail the tax exemption benefits in compliance with Section 10, subsection 14(ii) of the Income Tax Act (1961) and under Rule 2BB up to ₹ 1,600/month, or ₹ 19,200 annually. The government keeps on revising the cap on tax exemptions from time to time.

What is the difference between a conveyance allowance and Travelling allowance?

A travel allowance is issued to cover travel costs between home and office and is entirely taxable. In contrast, the conveyance allowance is to satisfy the transport expense for the office duty’s execution and is tax exempted to the incurred amount.

How is conveyance calculated in salary?

The employer gives conveyance allowance over and above the basic salary to help you cover the travel costs. You can determine the amount by checking the travel allowance offered to you over the year. The tax exemption limit is ₹ 1,600/month or ₹ 19,200/year.


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