How to Claim Income Tax Exemption on Conveyance Allowance ?

Know to Claim Income Tax Exemption on Conveyance Allowance and category of employees eligible to get it - The Central Board of Direct Taxes (CBDT) has allowed individuals under new lower tax regime to claim I-T exemption on conveyance allowance received from employers. 

The Central Board of Direct Taxes (CBDT) has now amended Income Tax rules to prescribe certain exemptions which can be availed by the employees. These include 

1. Any allowance granted to meet the cost of travel on tour or on transfer

2. Any allowance, whether, granted on tour or for the period of journey in connection with transfer, to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty. 

3. It also includes exemption for any allowance granted to meet the expenditure incurred on conveyance in performance of duties of an office or employment of profit, provided that free conveyance is not provided by the employer. 

Also Read - Know the Tax on Cash Withdrawals from Bank Accounts

The CBDT has further clarified that while determining value of perquisites, no exemption will be available in respect of free food and non-alcoholic beverage provided by employer through paid vouchers. 

Further, blind, deaf and dumb or orthopedically handicap employees can also claim ad-hoc exemption of transport allowance of Rs 3,200 per month while computing salaried income. Offering an optional lower rate of income tax to individuals.

The notification also considers that it is employers' responsibility to provide transport to employees with certain disabilities and therefore exempts allowance given to such employees for commuting to/ from office, even under new scheme”. The notification considers free meal/ beverages provided by an employer to employees during office hours to be a personal benefit to employees and not an expenditure for official purposes. 

Therefore, similar to other allowances withdrawn under new scheme/ slabs, tax exemption of such free meals/ beverages has been withdrawn under the new scheme. 

Section 115BAC(2) prescribes list of deductions/exemptions which are not available for deduction while computing total income if taxpayer opts for concessional tax regime. However, the provision empowers the CBDT to prescribe certain exemptions available under section 10 which can be availed by the employees.