Compensation is a mix of various categories of pay; includes fixed pay (Basic), Allowances (HRA, LTA,Child Education etc.), Reimbursements (Fuel & Vehicle, Driver Salary etc), Retirals (PF, NPS, PPF), variable pay (PLI) etc.
Some of the Allowances and Reimbursements attract tax exemptions as per the Income Tax Act 1961. Talking specifically of Medical Reimbursement & Conveyance Allowance; all tax exemptions have been removed from both of them wef 1st of April 2018.
A good compensation strategy has an equitable mix of all the components mentioned above. Hope this answers your question.
14th August 2018 From India, Delhi