Conveyance Allowance
Conveyance allowance covered travel between home and office. The ₹1,600/month exemption was scrapped in 2018 and rolled into the standard deduction.
What is Conveyance Allowance?
Conveyance allowance was a popular salary head until Budget 2018. Earlier, employees got ₹1,600 per month exempt from tax to cover commute costs. The government replaced this with a flat standard deduction of ₹40,000 (now ₹50,000 in old regime, ₹75,000 in new regime for FY 2025-26). So the standalone conveyance exemption is gone. Some employers still show conveyance as a salary line out of habit, but the amount is now fully taxable like any other allowance. Special category employees, blind or orthopaedically handicapped, can still claim ₹3,200/month. Reimbursement against actual cab or fuel bills for official travel stays tax-free under a different rule.
How Conveyance Allowance is used
Stop showing conveyance as a separate exempt head in salary structures. Either drop it into special allowance or run a fuel/cab reimbursement against bills if employees travel for work.
Conveyance Allowance FAQs
Is conveyance allowance still tax-free?
No. The ₹1,600/month exemption was removed in 2018. Standard deduction replaced it.
What about the disabled employee exemption?
₹3,200 per month stays exempt for blind, deaf, dumb, or orthopaedically handicapped employees.
Can I reimburse fuel bills tax-free?
Yes, official travel reimbursement against actual bills is not taxable. That is different from a flat conveyance allowance.