Is Conveyance Allowance Always Rs. 800, or Does It Change with Salary? Urgent Help Needed

I want to know about Conveyance Allowance - is it only Rs. 800 for any range of salary, or does it vary based on the salary amount? Please help me, it's urgent.

Thank you in advance.

Conveyance Allowance and Tax Benefits

For Conveyance Allowance, there is no prescribed limit in any organization. However, for tax benefits, it is allowed for a maximum of Rs 800 per month. Therefore, most companies provide the Conveyance Allowance as Rs 800 for tax benefit purposes.

So, for tax benefits, companies provide Rs 800. If in the future, the Government decides to provide more relaxation in Conveyance Allowance, the limit will change accordingly.

Thank you.

Regards,
Ashish

As rightly said by Ashish, you can have conveyance distributed grade-wise/designation-wise. At the end, when we compute the tax liability, the tax authorities will allow an exemption of a mere Rs. 800 per month for conveyance, irrespective of the designation or the mode of transport used.

This means that if I pay, say, Rs. 1500 as conveyance to my employees, it is very much allowed. However, when I calculate his tax liability and TDS, I will be able to give a tax exemption only on Rs. 800, and the remaining Rs. 700 will be taxed.

As a result, many companies stick to the standard Rs. 800 per month as conveyance so that we can try to save tax on the additional conveyance amount given to the employee.

Hope this clears your doubt.

As rightly said by Mr. Ashok Pal, the company may offer different conveyance allowances as per grade and post, but the Income Tax Act does not differentiate. Therefore, only Rs. 800 will be allowable as per the Income Tax Act.