Conveyance Allowance is exempt or taxable?

Conveyance Allowance: It’s also called travel allowance. The conveyance / travel allowance is offered to employees of a company to adjust for their travel from residence to and from respective work location. Allowances are generally offered by employer to an employee on of their basic salary component and it may or may not be taxable as per the Income Tax Act 1961.

In simple, we can say conveyance allowance is paid by an employer only if the there is no transportation facility is provided by the employer.  In case an employer is offered to his or her employee office transportation facility, conveyance allowance will not be provided to employees.

Limit for Conveyance Allowance:

For conveyance allowance there is no limit accompany can offered to his/her employees. However, there is a limit on the amount of exemption under the Income Tax Act as the conveyance allowance is given an exemption limit of up to Rs. 19,200/- per annum or Rs. 1,600 per month. The exemption is applicable of conveyance allowance is under section 10(14) (ii) of Income Tax Act and rule 2BB of Income Tax Rule.

Before April 2015, conveyance allowances taxation exemption limit was fixed to Rs. 800/- per month or Rs. 9,600/- per annum. In the budget 2015 the exemption limit is extended to Rs. 1,600/- per month or Rs. 19,200/- per annum for provided the tax benefit to the middle class taxpayers of the country.

You do not need to furnish the related document as a proof for conveyance allowance from your employer, it means that you will claimed the full amount i.e. Rs. 19,200/- per year tax exemption benefit under conveyance/travel allowance.

The calculation is not so much complicated you can simply take Rs. 1,600/- per month or Rs. 19,200/- per year. If the employer is given some allowance like special allowances, the conveyance allowances and other allowance is grouped with all allowances. Suppose your employer is provided some special allowance of Rs. 5,000/- per month which is fully taxable, you can deducted Rs. 1,600/- per month as a conveyance allowances and claimed the tax exemption for the same. You can do this after consulting the tax professional/ consultant.