Conveyance Allowance is the money your employer gives you to cover travel expenses from home to office and back. It’s a part of your salary package and meant to help you commute daily without spending from your own pocket.
Think of it as a “travel-to-work” allowance.
Key Features
- Given monthly with salary
- Mostly paid as a fixed amount
- May or may not be taxed based on how it’s structured
- It’s different from travel allowance (which covers business trips)
Tax Exemption Rules (as per Income Tax Act)
- Until FY 2018-19: ₹1,600/month (₹19,200/year) was tax-free under Section 10(14)(ii) and Rule 2BB.
- From FY 2019-20 onwards: This exemption was removed after standard deduction of ₹50,000/year was introduced.
So, today:
If your salary includes conveyance allowance, it is fully taxable,
unless you’re in specific roles (like judges, disabled employees) with different exemption provisions.
Special Cases with Tax Benefits
- Blind or orthopedically disabled employees can claim up to ₹3,200/month as tax-free conveyance allowance (under Section 10(14)).
- Government employees and certain central services may have different rules depending on their job structure.
Real-Life Example
If your employer gives you ₹1,600/month as conveyance allowance:
- Earlier (before 2019): Entire ₹1,600 could be tax-free.
- Now: It’s counted as part of your taxable income unless special conditions apply.
Quick Summary
| Feature | Details |
|---|---|
| What it is | Allowance for daily commute to work |
| Paid by | Employer |
| Tax exemption | No standard exemption now (post-2019) |
| Special exemptions | Yes, for disabled or special cases |
| Tax treatment now | Fully taxable for most employees |
Final Takeaway
Conveyance allowance once helped you save on tax, but now it’s mostly just part of your regular taxable salary. Still, it’s good to know how it appears in your payslip—and if you’re eligible for any special exemptions.
