How Can I Claim My Actual Commute Costs and Reduce Taxes When My Allowance Falls Short?

My salary slip states a conveyance allowance of Rs. 800 per month, whereas I'm actually spending nearly Rs. 2.5k per month on conveyance to reach the office from home. I commute using my 125cc bike, and my employer says I'm not eligible to claim the petrol expenses as it was not part of my salary. Is there any way I can claim this as conveyance expenses or motor vehicle expenses and reduce my tax outgo?

Conveyance Allowance and Tax Exemption

Conveyance used for official purposes can be claimed for tax exemption. However, for personal use, the limit is ₹800 per month.

Dear Pon, your statement is incorrect. More correctly, it needs a rider to ensure juniors do not make a mistake.

1. The Income Tax Act provides for an allowance of Rs. 800 per month (Rs. 9,600 per year).

2. It's an allowance that must be a part of your salary structure and designated as such in the salary sheet.

3. It's an allowance and not a reimbursement, so it has nothing to do with what you actually spend. If you were to walk from home to the office, you would still be able to claim the amount of Rs. 9,600 per year.

4. Business Expenses - That is conveyance related to the business of the employer (e.g., going from the office to the client's office, delivery, etc.) is an allowable deduction from the client's income tax dues. If the company spends that money, they will get a tax benefit; you as an employee will not be able to claim it.

5. If the company is reimbursing your expenses on travel, that amount must be at actuals, against vouchers that you give to accounts and get cash (or a transfer to your salary) and preferably not with your salary.

With reference to your particular query, if the actual travel expense from home to the office is not in your salary structure or CTC, you cannot ask your company to pay it. You can negotiate for it to be a part of your next increment perhaps. And there is no way for you to claim it from income tax either. Furthermore, you cannot now ask your employer to pay you a lesser salary and pay your petrol bills separately as a reduction in salary is definitely going to be scrutinized.

Yes, conveyance allowance is a must in a salary structure for claiming tax exemption, limited to ₹800 per month. Do you know how big corporates are formulating CTC structures nowadays for tax-saving purposes? They provide car allowance in the CTC, and employees are claiming tax credit by showing a logbook signed by the immediate boss, as if the travel expenses are meant for official purposes. This is happening in many organizations. I am receiving a car allowance but do not own a car. So, I am not claiming tax exemption except for ₹800 per month.

Regards,
Pon

If your company is paying a car allowance with the salary, then you do not get a deduction under income tax. The day the ITO asks for details or matches claims with the bank statement, the employee is going to get jacked. (I saw at a client's scrutiny, the ITO took a printout of transactions from all banks we have and showed me which ones he had marked as suspicious). If they are giving this separately from the salary, preferably against petty cash vouchers, it does not come as your income; it's okay. So what you are doing is probably the safer option and legally sustainable.

Conveyance Allowance and Reimbursement

Daily commuting from your home to the office and back is part of your job. For this purpose, the company provides you with Rs. 800/- per month as a fixed conveyance allowance. If you use a four-wheeler for commuting to the office and back, you will incur more expenses. Does this mean that the company has to reimburse you for the amount you spent, in addition to the conveyance allowance?

Thanks,

R.K. Nair