The method of calculating Conveyance Allowance
Section 10 subjection 45 provides that the allowance offered to the chairman or members of UPSC is not chargeable to tax. Conveyance allowance for blind/deaf/ dumb people and orthopedically handicapped is up to INR 3,200 per month. There are two special exemption cases in conveyance allowance which are as follows – Special cases pf exemption for Conveyance Allowance Exemption of an amount up to INR 19,200 per annum is applicable under section 10(14)(ii) of the Income Tax Act. An amount paid above the limit of conveyance allowance would be chargeable to tax under the head income from salaries. The exemption can be availed by individual salaried employees. Subsection 14 of section 10 of the Income Tax Act, 1961, read with rule 2BB of Income Tax rule deals with exemption of conveyance allowance. For salaried individuals, the exemption limit of conveyance allowance is set at Rs 1,600 per month. The amount paid to employees as conveyance allowance varies from company to company but the limits of tax exemption are uniform for all the employees. No receipts or bills are required to be furnished by salaried individual employees to depict that they are in receipt of conveyance allowance. Employers providing transportation facilities to their employees are not required to pay conveyance allowance. Some of the important features of conveyance allowance are discussed below. Lower of 70% of such allowance or INR 10,000 per month.Ĭonveyance allowance is typically paid under the condition that no transportation is provided by the employer. INR 38,400 per annum/ INR 3,200 per monthĬonveyance Allowance for the employees engaged in transport businesses for personal expenditure during running option transport The following table shows the taxability of conveyance allowance-Ĭonveyance Allowance for the purpose of commuting between place of residence and place of dutyĬonveyance allowance for commuting between place of residence to the place of duty for physically disabled or orthopedically handicapped employees That being said, there is an exemption limit that can be availed for conveyance allowance under the Income Tax Act, 1961. Limit of Conveyance Allowance for the Financial Year 20-21 and Assessment Year 21-22įor the financial year 20-21 and Assessment Year 21-22, no limit is provided on the conveyance allowance amount that can be paid by your employer. Allowance for conveyance in salary is taxable if it exceeds the exemption limit. If the employer provides a transport facility and an employee avails that transport facility no conveyance allowance in salary is paid. Conveyance allowance is generally offered when the employer does not offer any transport facility for travelling to the workplace to its employee. It is also known as transport allowance which, in general, means an allowance paid for the purpose of transport. 
Let’s understand what this allowance is all about.Ĭonveyance allowance in salary is paid by the employer to employees for travelling from their home to the workplace and vice versa. One such allowance is given for conveyance.
Outstanding conveyance expenses is shown in liabilities side of balance sheet.Employers offer many allowances to employees in addition to the basic salary. Treatment of Conveyance Expenses Account in final accountsĬonveyance expenses is an indirect expenses, Therefore, it is shown in expenses side of Profit and Loss Account. Type of Voucher to be Prepared:- Journal Voucher Type of Voucher to be Prepared:- Bank Payment VoucherĬ) In case of unpaid conveyance expenses:.
Type of Voucher to be Prepared:- Cash Payment Voucherī) In case, conveyance expenses paid by cheque:. In case of conveyance expenses only the actual amount spent on transportation of employees is booked but in case of conveyance allowances, a fixed amount is given to the employees irrespective of their actual expenditure.Īccounting treatment of Conveyance ExpensesĪ) In case, conveyance expenses paid in cash:. The conveyance expenses is different from conveyance allowance. The amount spent by company in respect of transportation for its employees from their residence to office and office to their residence, also is treated as conveyance expenses. The amount spent for local visits only treated as conveyance expenses. When the employees of a business firm spend money for visiting different places for official purpose, the amount spent by them for this purpose is allocated to conveyance expenses account. All transportation cost of the employees of a business firm, comes under the head conveyance expenses account.
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