Conveyance Allowance: Definition, Limit, Exemption, and Calculation

byDilip PrasadLast Updated: January 3, 2024
Conveyance Allowance – Definition, Limit, Exemption and Calculation

Conveyance allowance or transport allowance is given by the company or an employer to the employees to compensate them for the expenses of their commute between their residence and the workplace. Let’s learn more about conveyance allowance and how the exemption works.

Things You Should Know About Conveyance Allowance

  • A company mostly only offers conveyance allowance if a transportation facility is unavailable for the employees, irrespective of whether or not the employees utilize the facility. 
  • There are no set limitations on the amount of conveyance allowance that a company can pay to the employee. 
  • To get a conveyance allowance, salaried individuals don’t have to present any receipts. 
  • This additional allowance is paid on top of the basic salary and is only taxed if it crosses the exemption limit. 
  • The conveyance allowance falls under the jurisdiction of the Central Board of Direct Taxes (CBDT), which is a statutory body that amends the existing rules periodically.

Amendments to Conveyance Allowance Rules

From the financial year, 2021-22, a few amendments have been made to conveyance allowance. A subsection has been added to Rule 2BB of the Income Tax Rule, which allows allowances for the following:

  • Meet traveling expenses while the employee is on a tour or transfer 
  • Meet daily expenses incurred by the employee when they are not in their regular place of work

Conveyance Allowance Exemption Limit for AY 2023-24

Irrespective of the tax bracket that the employee falls under, conveyance allowance is exempt from taxes up to a specific limit.

How is Conveyance Allowance Calculated?

The calculation of conveyance allowance does not follow a specific formula. It is simply based on the employee’s basic salary. There is no prescribed limit on the amount of conveyance expenses that a company can provide to its employees. However, if the amount exceeds the exemption limit, it becomes taxable.

Let’s take an example to understand this better. If a company provides a conveyance allowance of Rs. 10,000 to an employee, only Rs. 1,600 of that amount will be exempt from taxation. The remaining Rs. 8,400 will be subject to taxation.

Also Read: What is Dearness Allowance (DA)?

Conveyance Allowance for Government Employees

The conveyance allowance for employees of the central government of India can be classified as below-

Conveyance allowance is paid by employers to their employees only if there are no company transportation facilities available. This allowance is calculated as a part of the basic salary of the employee and up to a specific amount, exempt from taxation.


This blog is written to make it easy for readers to understand complicated processes. Some information and screenshots may be outdated as government processes can change anytime without notification. However, we try our best to keep our blogs updated and relevant.

How much is the conveyance allowance in salary?
Under Section 10(14)(ii) of the Income Tax Act, 1961, salaried individuals are eligible for a conveyance allowance exemption of Rs 1,600 per month or Rs 19,200 per annum.
What is travel allowance in salary?
A travel allowance in salary refers to an additional amount provided by an employer to an employee specifically to cover the expenses related to work-related travel. This allowance is typically given in addition to the employee’s regular salary and is intended to cover the costs incurred during business travel.
Does conveyance allowance come under DA?
Conveyance allowance is included as one of the components along with House Rent Allowance (HRA) and other elements to form the total salary. These components, including conveyance allowance, are added to the basic salary, along with the Dearness Allowance (DA), to calculate the total salary amount.

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