Understanding Conveyance Allowance: What's the Non-Taxable Limit and How Does It Affect Your Salary?

Non-taxable Limit for Conveyance Allowance

Hi Everyone, my friend has received a job offer from a company where the basic salary is ₹20,000, HRA is ₹2,200, and conveyance allowance is ₹27,800. With this salary structure, he feels that he will need to pay more income tax. When he asked the employer why the HRA is less and the conveyance allowance is more, he was informed by the employer that they may provide accommodation in the future.

So, what is the maximum non-taxable amount for the conveyance allowance?

Waiting for a reply.

Regards,
Sandhya

Non-taxable limit for Conveyance Allowance

Hi,

I know that the non-taxable limit for Conveyance allowance is 800 without producing any bill or proof. But what will be the non-taxable limit for Conveyance allowance if we produce bills or use our vehicle for conveyance?

Waiting for a reply.

Sandhya

Dear Sandhya,

Your salary breakup structure is incorrect. The exemption limit on conveyance is ₹9,600 per annum.

Sanjeev

Only Rs. 800/- per mensem is allowed as a non-taxable Conveyance Allowance. The excess amount will be treated as taxable income.

Regards,
Vasant Nair

Dear Sandhya, the answer to your question is well explained as 800 P.M. / 9600 P.A. Please note that the employer can pay any sum on account of conveyance reimbursement, for which you will have to attach the proper bill to claim this benefit, as is being offered by most companies nowadays. I agree that this amount should not be shown as an allowance in the offer letter; the correct way to communicate this is conveyance reimbursement.

Thanks,
Poonam

Conveyance Exemption and Vehicle Reimbursement Details

Conveyance exemption for an individual is ₹800 per month, and in the case of a handicapped individual, it is ₹1,600 per month.

Types of Vehicle Reimbursement

Regarding vehicle reimbursement, there are different types provided as a perquisite, such as employee-owned car/employer-owned car. The criteria for fully/partial use for self and employer, etc., also apply. The valuation of the perquisite depends on the CC of the engine. If it is below 1.6cc, then ₹1,800 per month (an extra ₹900 for a chauffeur) is allowed, and in case it exceeds 1.6cc, then ₹2,400 per month (an extra ₹900 for a chauffeur) is permitted.

The detailed perquisite rules are attached for your reference.

Regards,
Siji

Dear Ms. Sandya,

The answer to your question is well explained as 1,600 P.M. / 19,200 P.A. Please note that the employer can pay any sum towards Conveyance Allowance. This change will be effective from 1st April 2015, as announced by the Central Government of India.

Conveyance Allowance has been revised to 1,600/- from the existing 800/- per month.

Regards,
Shivakumar
HR
Bangalore