Conveyance and Transport Allowance, and how it is taxed

Is conveyance allowance still tax free for the commute?

No. For a long stretch, salaries carried a conveyance line of Rs 1,600 a month that an employee could keep free of tax, meant to cover the ride between home and office. That flat exemption was folded into the standard deduction from 2018 to 2019. The commute relief did not vanish so much as get absorbed into a single figure that applies whether or not you run a conveyance head.

The practical effect is blunt. A plain fixed conveyance allowance paid for commuting is now fully taxable in the employee's hands. Renaming a special allowance line as conveyance buys nothing. There is no separate monthly commute exemption to add on top of the standard deduction, and a page that tells you otherwise is quoting a rule that has lapsed.

So the first thing to demarcate on your own payslips is intent. A cash line labelled conveyance, paid every month regardless of any journey, is taxable pay like any other cash allowance. It is the same logic that makes a fixed special allowance in the salary fully taxable. The label does not carry the relief; the actual spend on duty does.

When does conveyance allowance stay exempt?

One route survives. Conveyance allowance granted to meet the cost of travel on official duty is exempt to the extent actually spent, under Section 10(14). This is the exemption that still has legs, and it turns on real work travel rather than the daily trip to the desk.

Think of a field sales rep who visits clients, a service engineer who reaches sites, or an accounts person sent across town to a registrar. The travel is for the job, not the commute. Where you meet that cost, the amount the employee genuinely spends on duty travel is not taxed. Anything paid beyond the real spend is taxable, so a round monthly figure handed out with no journey behind it does not qualify.

Because the relief tracks actual spend, evidence matters. Keep the trip, the purpose and the amount on record, the same discipline a uniform or a duty allowance asks for. You can read the department's own list of allowances on the Income Tax Department site. The remit of Section 10(14) is duty travel, and it is scant comfort for a plain commute line.

Who can claim the Rs 3,200 transport allowance?

There is a separate transport allowance exemption, and it is easy to misread as a general benefit. It is not. Transport allowance of Rs 3,200 a month is exempt only for an employee who is blind, deaf and dumb, or orthopaedically handicapped in the lower extremities.

That is the whole of it. An ordinary employee cannot claim this figure, and you should not build a salary structure that leans on it for general staff. It exists to help employees with a specified disability meet the extra cost of getting to work. If someone on your rolls qualifies, the head is real and useful. For everyone else it does not apply.

Figures above are the ones set out by the Income Tax Department. The exemption is claimed by the employee in their return; the employer sets up and reports the pay.

How the two tax regimes change the picture

India runs two regimes side by side. The old regime allows most allowance exemptions. The new regime, which has been the default for most employees since assessment year 2024 to 2025, strips almost all of them away. That split shapes how much any allowance line is worth to the person receiving it.

For a plain conveyance line, the regime hardly matters, because the commute relief is gone either way and the pay is taxable. Where the two regimes do bite is on the broader set of exemptions your staff might have relied on, from house rent to leave travel. If you want the full map of what falls away, the salary structure guide and the note on what CTC actually contains lay it out for an employer.

The honest position on the duty travel exemption under Section 10(14) is to confirm the current treatment for the regime the employee is on. That is a question for your CA, not something you decide from the payslip. Your job is to structure and report the head correctly; the return does the rest.

How to put conveyance in the salary structure

The design choice sits with you, and it comes down to one fork. Is conveyance a fixed cash line, or a reimbursement against duty travel? The two look similar on a payslip and are taxed differently, so pick deliberately rather than by habit.

A fixed cash conveyance line is simple to run and taxable in full. A reimbursement against real duty travel can be exempt to the extent spent, but it asks for records and a process. Many small firms keep a modest fixed line for tidiness and route genuine field travel through reimbursement. The latitude is yours, as long as the label matches the substance.

In Offrd, Basic defaults to 50 percent of CTC and HRA to 40 percent of Basic, and both are editable. Conveyance sits as another named head you add and set. It flows onto the offer letter and the payslip the same way, and carries through to the full and final settlement, so the figure stays consistent across the ledger. If you want to see the take home effect of a given split, the CTC and in hand calculator shows it.

Where Offrd helps, and where it does not

A clear line, since tax around this head confuses people. Offrd does not compute anyone's income tax exemption, and it does not tell an employee their taxable income. It does not file returns or produce Form 16 for that purpose, and it does not do tax planning.

What it does is structure and document the pay. Offrd sets conveyance up as a salary head, shows it on the offer letter and payslip, and keeps the numbers steady from joining through to exit. Whether that allowance is exempt for the employee is decided under the Income Tax Act when they file, and your CA or payroll consultant handles TDS and Form 16. That division of labour keeps the paperwork honest and the tax call with the right person.

More than 4,000 companies across 350 plus Indian cities use Offrd to build salary structures and documents in minutes.

Setup runs under two minutes, with 50 free credits on signup. Pricing starts at 99 rupees a document, or 50 rupees per active employee a month, and Atndnz attendance is bundled free.