ITR Filing Deadline Missed? Last chance to claim your tax refund. File Belated Return

### Who is eligible for Transport Allowance?

Transport allowance is granted to the employees to meet their expenditure made on commuting between their residence and place of duty and to the employees working in the transport business.

Whether the Assessee is handicapped
Tax Free Amount

## How to calculate transport allowance?

Calculating the tax on an exemption allowance is a straightforward process. Let's break it down with an example for a clearer understanding.

Example: If your company or employer provides you with a transportation allowance of Rs. 2,100 per month, the taxable amount will be Rs. 500. Here's how it works:

• The tax exemption limit for transport allowance was Rs. 1,600 per month (Rs. 19,200 annually) based on previous regulations.
• If the received amount is above this exemption limit, the excess amount is taxable.
• In this case, the amount that exceeds the exemption limit is Rs. 2,100 - Rs. 1,600 = Rs. 500.
• Therefore, the taxable portion of the transport allowance is Rs. 500 per month.

If the received amount had been Rs. 1,600 or less, the entire allowance would have been tax-free.

To get a precise calculation of the tax exemption amount for transport allowance, you can use our Transport Allowance Tax calculator, which is designed to provide accurate results.

## FAQ'S - Calculation of Transport Allowance Tax Exemption

### Q What is Transport Allowance?

Transport allowance is the money provided for the purpose of transport. Transport allowance under Section 10(14) with rule 2BB of the Income-tax Act,1961 is provided for either of the following:-

• Transport allowance is granted to the employee for commuting from the residence to the working place and vice-versa.
• Suppose you are an employee working in the Transport business who runs a transport from one place to another as a part of your official duty. In that case, transport allowance means the money you receive to meet your personal expenses incurred during the course of your official duty provided the employee is not in receipt of the daily allowance.

### Q How is the amount of the transport allowance determined?

The amount of the transport allowance is usually determined by the employer, based on factors such as the distance between the employee's home and workplace, the cost of transportation, and the overall compensation package provided to the employee.

### Q How to calculate transport allowance in salary?

You can calculate the Transport Allowance by this formula. A + [(A x D)/100] = Transport Allowance.

### Q How to calculate transport allowance in railway?

Following the government's decision based on the recommendations of the Seventh Central Pay Commission, the President has approved new rates for Transport Allowance for railway employees. These new rates are as follows:

Employees drawing pay in Pay Level Rates of Transport Allowance per month
Employees posted in the cities as per Annexure Employees posted at all Other Places
9 and above Rs. 7200 + DA thereon Rs. 3600+ DA thereon
3 to 8 Rs. 3600 + DA thereon Rs. 1800 + DA thereon
1 to 2 Rs. 1350 + DA thereon Rs. 900 + DA thereon

### Q Can the transport allowance be given in kind instead of cash?

Yes, the transport allowance can be given in kind, such as providing the employee with a company vehicle or paying for their public transportation expenses directly.

### Q Who receives Transport Allowance?

Only those employees whose employer specifically provides the transport allowance in their CTC structure are eligible to receive it. Thus, the relationship between employer and employee must exist as a precondition for receiving the transport allowance. This means all salaried persons are eligible for transport allowance and self-employed persons cannot claim it.

### Q Is Transport Allowance taxable? If yes, what is the tax exemption on Transport Allowance?

The whole amount of transport allowance received is not taxable. The government knows it is a genuine expense and thus wants to save you from the burden of paying heavy taxes. For this purpose, the amount received as transport allowance is made partially taxable, i.e., partially exempt under section 10(14)(ii) of the Income Tax Act. There are limits on tax exemption depending on your tax situation. These are :

• Transport Allowance for handicapped persons-
A transport Allowance of Rs.3,200 per month is tax-free for handicapped employees. Handicapped employees mean all those who are blind or deaf or dumb, or orthopedically handicapped with a disability of the lower extremities.
• Transport Allowance for employees of the Transport System-
A Lower of Rs.10,000 per month or 70 % of the transport allowance is tax-free for specified employees of the transport system. This exemption is given to those employees who run transport from one place to another as a part of their official duty and does not receive a daily allowance.
• Transport Allowance exemption for FY 2023-2024 is as follows:-
Persons Monthly Tax Exemption(Rs./month) Yearly Tax Exemption(Rs./year.)
Handicapped Persons(Salaried) 3,200 38,400
Employees of the Transport System 70% of the amount received or 10,000, whichever is less 70% of the amount received or 1,20,000, whichever is less

### Q Is there a difference between Transport Allowance and Conveyance Allowance?

Many people need clarification on terms of transport allowance and conveyance allowance and need to correct mistakes while claiming tax exemption in their Income Tax Returns.

Transport Allowance is covered by section 10(14)(ii) of the Income Tax Act. It is tax-exempt to the extent of the amount notified by the Income Tax Department. Actual expenditure is not required to claim the tax exemption.

Conveyance Allowance is covered by section 10 (14)(i) of the Income Tax Act. It is tax-exempt to the extent of the amount spent for the official purpose for which it is given to claim the tax exemption. Tax benefits can be taken only when no free conveyance is provided for the same purpose.