What is Conveyance Allowance: Exemption Limit, Calculation and Eligibility

The conveyance allowance exemption limit is Rs. 1,600 per month or Rs. 19,200 per year under the Income Tax Act, 1961. Any amount received as conveyance allowance above this limit is taxable as salary income. Disabled employees get a higher exemption limit of up to Rs. 3,200 per month.  

Conveyance Allowance Exemption

Conveyance allowance exemption limit are as follows:

Particulars	Amount
Monthly Exemption	Rs. 1,600
Annual Exemption	Rs. 19,200
Disabled Employees	Rs. 3,200 per month

What is Conveyance Allowance?

Conveyance allowance is a special allowance to cover their expenses while travelling to perform office or employment duties.

They are usually offered on top of their basic pay and are eligible for tax deductions up to the actual allowances received. Generally, conveyance allowance eligibility is only applicable to employees who do not have a transportation system arranged by their employers. Furthermore, it depends on the employee’s position in the organisation. 

Conveyance Allowance exemption can be claimed by employees under both the old and new tax regimes.

Conveyance Allowance Exemption Limit

Under Section 10(14)(ii) of the Income Tax Act, conveyance allowance received is exempt from tax upto the following limits:

• Employees: Rs. 1,600 per month or Rs. 19,200 per annum
• Disabled Employees: Rs. 3,200 per month

Any amount received above the allowed exemption limit is taxable under the head “Income From Salary”.

Who is Eligible for Conveyance Allowance?

Salaried employees receiving conveyance allowance as part of their salary structure are eligible for conveyance allowance exemption. It generally applies to:

• Salaried employees commuting daily to work
• Employees receiving fixed travel allowance from employer
• Employees whose salary package includes transportation support 

How to Calculate Conveyance Allowance in Salary?

For calculating exemption limit for conveyance allowance, the lowest can be claimed as deduction:

• Actual allowance given by the employer.
• Actual amount paid by the employee

A sufficient document, such as a bill or expense receipt, is required as proof to claim a deduction for conveyance allowances. The deduction of conveyance allowances is available under both the old and new tax regimes of the Income Tax Act.

If you receive other special allowances, you can group them with your conveyance benefit to avail of tax deductions.

Documents Required to Claim Conveyance Allowance

The following documents have to be maintained by employees to claim conveyance allowance exemption:

• Travel bills or receipts
• Fuel expenses
• Transport tickets

Points to Remember when filling ITR

1. Form 16: The details of the conveyance allowance and the taxable portion after exemption are reflected in Form 16, provided by the employer. This form is essential for employees when filing their income tax returns.

2. Income Tax Return (ITR): While filing ITR, the exempt and taxable portions of conveyance allowance should be appropriately reported under the "Income from Salary" section.

Final Word 

Conveyance Allowance is a beneficial component of the salary structure that helps employees manage commuting costs. Now that you know the conveyance allowance exemption limit, you can opt for an exemption accordingly while filing your returns. Furthermore, this tax relief is available regardless of whether you are filing under the old or the new tax regime.