Conveyance reimbursement for official duties is not a perquisite under income tax law, so no TDS applies.

Conveyance allowance reimbursed to employees for official duties was treated as compensatory in nature because it merely repaid expenses first incurred by the employees in the course of work. On that basis, it was not regarded as a perquisite forming part of salary income under section 17(2) of the Income-tax Act, 1961, and no tax was deductible at source on the reimbursement. The treatment also removed any associated interest exposure linked to non-deduction of tax at source on that amount.

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Issues: Whether conveyance allowance reimbursed to employees for official duties constitutes a perquisite under section 17(2) of the Income-tax Act, 1961, so as to attract deduction of tax at source and interest liability.

Analysis: The allowance was paid by way of reimbursement of conveyance expenses incurred by the employees in the first instance for official duties. On that basis, the amount was treated as compensatory in character and not as a perquisite forming part of salary income for tax deduction purposes.

Conclusion: The conveyance allowance was held not to be a perquisite under section 17(2) of the Income-tax Act, 1961, and no tax was deductible at source on that amount.

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