Understanding Conveyance Reimbursement: What Exemptions Apply and What Bills Do You Need?

Hi,

We have a transport allowance and conveyance reimbursement. I know that the transport allowance is exempted, but can anyone please help me out to know what is the exemption for conveyance? What bills are required for claiming the exemption?

Thanks and Regards,
Vals

As per the provisions of the Income Tax Act, 1961, any transport allowance granted to an employee to meet his expenditure for the purpose of commuting between the place of residence and the place of duty is exempted to the extent of Rs. 800/- per month. The same allowance is Rs. 1,600/- per month in the case of handicapped individuals.

Conveyance allowance is different from transport allowance; the taxability of conveyance allowances will be as follows:
- If the allowance is received for personal purposes, it will be considered part of the salary and fully taxable.
- If the allowance is for office purposes, the employer will be liable to pay Fringe Benefit Tax (FBT), and the employee is not liable to pay tax on it.

The taxability in the hands of the employer will be (30% + Surcharge + E.Cess) of the taxable benefit, which, in this case, is the conveyance allowance. The taxable benefit, as per the IT Act for conveyance allowance, is 5% of the total value.

Regards,
Deepak Singh