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All-in-one HR platform · v2.0
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All-in-one HR platform · v2.0
14-day free trial · No credit cardhello@HrMagix.com
An allowance towards travel between home and work. Under current rules a fixed commuting allowance is generally taxable as salary, with exemptions limited to specific cases such as certain employees with disabilities, so its value in a salary structure is now mainly presentational.
Conveyance allowance now mostly matters when salary structures are being cleaned up. HR and payroll review whether a fixed monthly conveyance line still serves any purpose, and many companies fold it into a special allowance or convert it to reimbursement of actual official travel.
As an example, a structure carrying ₹1,600 a month of conveyance allowance pays it as taxable salary in the payroll's TDS working. If the same employee travels to client sites, a separate travel reimbursement with bills or a log is treated differently from the fixed allowance, so the two should be kept on separate lines.
The common mistake is copying an old structure that shows conveyance as exempt. Check the current Income-tax rules, and make sure the payroll tax setting matches the policy so that year-end Form 16 figures do not need correction.
A fixed conveyance allowance for commuting is generally taxable as salary under current rules. Amounts for official travel reimbursed against actuals are treated differently, so check the current position.
An allowance is a fixed sum paid every month regardless of spend. A reimbursement pays back actual costs incurred on official work, against bills or claims.
As an allowance outside basic and dearness allowance it is generally excluded from the PF wage. Under the labour codes, in force since 21 November 2025, allowances above 50% of total pay are added back to wages, so review the structure.
If it is a fixed monthly allowance, it is usually reduced in proportion to loss-of-pay days, like other fixed components. The policy should state this.
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