Conveyance Allowance

Conveyance allowance, also referred to as transport allowance, is a kind of allowance offered by employers to their staff to compensate for their expense to and from their residence and workplace. This allowance is usually offered additionally to the basic salary, and should or might not be taxable under the income tax Act of India (depending on how much the employer is offering).

Companies usually supply this kind of allowance just in case they are doing not provide transportation services to their staff. If AN employer does supply such facilities, then conveyance allowance will not be paid, notwithstanding whether or not AN employee has made use of or opted out of the company’s transport service.

How to Calculate Conveyance Allowance?

The tax exemption limit for conveyance allowance is about at Rs. 1,600 per month, regardless of the tax bracket an individual falls under. If the individual is given a special allowance, that is absolutely taxable, then he or she will substitute Rs. 1,600 from it as conveyance allowance and claim tax exemption on that.

For example, if a corporation is providing a special allowance of Rs. 5,000 per month (100% taxable), Rs. 1,600 out of the total of Rs. 5,000 are often allotted as conveyance allowance and tax exemption are often claimed on that. However, it's suggested to 1st consult with a tax expert before going ahead with claiming tax exemption on conveyance allowance.

Conveyance Allowance Exemption

There is no restriction on what proportion conveyance allowance an employer can give its employees. However, there's a limit on the number of tax exemption under the income tax Act. Under the Section 10(14) of the income tax Act and Rule 2BB of income tax Rules, the conveyance allowance exemption limit is Rs. 1,600 per month (or Rs. 19,200 a year). Before April 2015, the taxation exemption limit was set at Rs. 800 per month or (Rs. 9,600 a year). The exemption limits were raised in Budget 2015, with the aim of reducing the tax burden of the upper-middle-class taxpayers.

Special Exemption Cases

The exemption limit for people who are orthopedically handicapped or blind is Rs. 3,200 per month.

According to Section 10(45), the conveyance allowance offered to UPSC members doesn't attract any tax.

Conveyance Allowance Features

The exemption limit for all salaried people is set at Rs. 1,600 per month.

The amount that's offered as conveyance allowance will vary from company to company. However, the tax exemption limit is same for all - Rs. 1,600 per month.

Companies providing transportation facilities to their workers don't provide conveyance allowance.

Salaried people don't got to furnish any bills or receipts to receive conveyance allowance.

Conveyance allowance may be classified with alternative allowances like special allowance.

Consolidated Travelling Allowance

This allowance can substitute other forms of travelling allowances for transit within the government official's limits of duty. A permanent travelling allowance may be drawn all year round, even once the official isn't present at the headquarters. It will, however, not be attainable to draw possible instances like temporary transfer or leave, unless expressly provided within the chapter rules throughout any amount once travelling allowance of another kind is drawn.

Conveyance Allowances to Central Government Employees

Other Allowance Paid By Employers

Besides conveyance allowance, there are different kinds of allowances that firms offer their staff. They are:

House Rent Allowance (HRA)

Medical Allowance

Special Allowance

Leave travel allowance (LTA)

Dearness Allowance (DA)

Additional Resources:

• Conditional Job Offer Letter

• Hiring Policy and Procedures

• Interviewing Candidates for Employment

• How to produce an offer Letter without contractual Implications

• Unconditional job offer letter

• Temporary-employment job offer letter

• What is payroll?

• Filing TDS return

• What is P Tax?

• Gross Salary: All You Need To Know