Taxability of Conveyance Allowance

[Ashish Gupta]

The conveyance allowance of Rs. 800 P. M. is tax free in the hand of employees and if the company provide car/conveyance facility to the employees then what will be the taxability of conveyance allowance of Rs. 800 PM. in case: i. Company provides car to the employees and add the value of perquisites of car in the salary and deduct TDS and ii. Company provides conveyance facility through company bus to the employees and do not charge any amount from employees.

[CAGOPALJI AGRAWAL]

If the company is providing free conveyance facility then no tranport allowance would be exempted under Rule 2BB. But if the valuation of the car is added in the salary then the exemption should be available to the extent of Rs. 800.00 because proviso to Rule 2BB states that free conveyance is not provided by the employer.

[Guest]

from when surcharge and cess is not applicable on TDS in case of non salary??

AI Summary

Conveyance allowance exemption applies when employer does not provide free conveyance; otherwise exemption is disallowed for salaried employees. Conveyance allowance is tax-exempt subject to the exemption rule: if the employer provides free conveyance (eg company bus) the transport allowance exemption is not available; if the employer provides a car but values the perquisite and adds it to salary for TDS purposes, the conveyance allowance exemption continues to apply to the extent permitted because the proviso treats exemption as available where free conveyance is not provided.