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Former Member

Conveyance Exemption..

Hi,

i am working for Indian Payroll.

Here iam faceing problem with conveyance Allowance exemption. Same Employee Getting Car Allowance and Conveyance Exemption. As per Standard SAP "INCCO" funtion can do only one depends upon Conveyance code.

i Know it is possible through PCR, But if I put exemption under Section 10. it is not correct as legal.....

Can any body sort this..............

Thanks In Advance.

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1 Answer

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    Former Member
    Sep 20, 2010 at 09:40 AM

    Hi Friend,

    A person can get Car allowance and exemption at the same time unti 9600.

    SAP standard is Rs 800*12 =Rs 9600 exemption for all having conveyance wagetypes with Conveyance being mapped to Conveyance tax code.

    From Legislative perspective every individual is eligible for Conveyance exemption of Rs800 per month.

    Thus when it comes to employer, there are some companies who provide Cab facilities to employees and thus do not want to give exemption to employees, in this case Customization is required, but at the same time many companies after providing CAB ALSO, provide the exemption to employees as Rs9600 and SAP standard does the same. Upto 800 per month and yearly Rs9600 IS FREE FROM TAX and more than that is taxable.

    Hence please kindly explain the same to client and ask them to confirm, if they want to give exemption to the person with car alowance until 9600 or they want the WT to be fully taxable. Based on this you can proceed.

    Hope the above is your interest of understanding.

    Best Regards,

    Prabha

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    • Former Member Former Member

      Hi Friend,

      Just to share with you a thought that in Indian Legislation there are always 2 interpretation of the same rule.

      When we faced the issue for CAB facilities , our legal manager confirmed there is no hard and fast rule on Conveyance exemption and ultimately it comes to employer for there choice of interst.

      Just could you please share as to what exactly the client is asking for Conveyance exemption.

      If employee is piad on Saturday and Sunday , and client wants that amount to be exempted under section 10 please refer to the below:

      Some excerpts from ITAX Doc:

      Allowances exempt u/s 10(14):- Certain allowances

      given by the employer to the employee are exempt u/s

      10(14). W.e.f. 1-7-1995, all these exempt allowance are

      detailed in Rule 2BB of Income Tax Rules and are briefly

      given below:

      ℹ️ Allowance granted to meet cost of travel on tour or

      transfer.

      (ii) Allowance granted on tour or journey in connection

      with transfer to meet the daily charges incurred by the

      employee

      (iii) Allowance granted to meet conveyance expense incurred

      in performance of duty, provided no free conveyance is

      provided.

      I see in point number 3 it is mentioned if no free conveyance then conveyance is exempted.

      There are some booklets in Itaxindia website which are quite helpfull.

      Please share your thoughts.

      Best Regards,

      Prabha