How Should I Communicate the 2015 Conveyance Allowance Change to Employees?

Hi,

I am a fresher currently working as an HR generalist. Due to the recent budget announcement in 2015 regarding the "conveyance allowance revised from Rs. 800 to Rs. 1600," there is a need for CTC components readjustment for all employees. Should I send a global email to my employees or reissue the CTC components readjustment details on a separate Letterhead to all my employees? Please guide me on this. Appreciate your help!

Regards,
Lovera

Please wait until the Union Budget is passed in the Honorable Parliament. After that important formality, necessary changes can be made.

Whether you are a fresher or experienced, being an HR generalist means you should be a jack of all trades. You need to read everything minutely, study it, and understand it.

There is no revision in the budget regarding conveyance allowance. Rather, the union or state budget cannot have this kind of proposal, of which an HR generalist must be aware.

Union Budget 2015 Update

The Union Budget 2015 has increased the tax exemption in transport allowance to Rs. 1600 per month from Rs. 800 per month under section 10 of the Income Tax Act.

This revision will not have any effect on CTC. You need to understand what CTC is.

Thank you.

Rule of income tax or Union Budget announcements come into effect. I think you need to only adjust CTC, and it will be reflected in the salary slip. So, there is no need to send or intimate each employee individually anything about it.

Hi member,

There is no need to provide a separate letter or circular in this regard. Including it in the pay is enough.

Notification No. 39/2015 [F.NO.142/02/2015-TPL]/SO 1002(E), Dated 13-4-2015

In exercise of the powers conferred by section 295, read with clause (14) of section 10 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:

(1) These rules may be called the Income-tax (6th Amendment) Rules, 2015.
(2) They shall come into force on the 1st day of April, 2015.

Amendments in the Income-tax Rules, 1962

In the Income-tax Rules, 1962, in rule 2BB, in sub-rule (2), in the Table:

- Against serial number 10, in the entry under column (4), relating to the extent to which allowance is exempt, for the letters, figures, and words "Rs.800 per month," the letters, figures, and words "Rs.1600 per month" shall be substituted.
- Against serial number 11, in the entry under column (4), relating to the extent to which allowance is exempt, for the letters, figures, and words "Rs.1600 per month," the letters, figures, and words "Rs.3200 per month" shall be substituted.

Regards

Dear nehe.bhausaheb1607,

Could you please let the forum know what this serial 11 is? Members said the revision from 800/- to 1600/-. But this entry says a revision from 1600 to 3200. I appreciated your post giving the notification, but it would be more appreciated if you give further input. Learning is possible not only by providing the source. Hope you understand what I mean to say.

Exemption Limit Increase Notification

The increase in the exemption limit from Rs. 800/- per month to Rs. 1,600/- per month is applicable to all assessees, whereas the increase from Rs. 1,600 to Rs. 3,200/- is applicable only to blind and other handicapped individuals. This change has already been notified to be effective from April 1, 2015, and the increased exemption will benefit assessees during the 2015-16 tax year. This should be read in conjunction with the Table under sub-rule 2 of Rule 2 BB, Income Tax Rules, 1962, where these entries are located, and to which these amendments have been made through the issuance of this notification.

Impact on Employers and CTC Structure

There is a possibility that some employers, who in their Cost to Company (CTC) structure, may have restricted the Conveyance allowance to the IT exemption limits, i.e., until recently up to Rs. 800 and Rs. 1,600 per month. With this new notification, employers are now free to adjust the Conveyance allowance components within the total CTC, either maintaining it at the same level or increasing the CTC accordingly.

Regards