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conveyance allow exemption

Abansal ( Manager) (121 Points)

06 February 2010

hi all,

one of our company employees is having compnay car which he is using for official and personal purpose both , but all other expenses like petrol, repair maintenece, etc are borne by himself only. acc to the perquisites Rs 600 pM for this perquisite is added in his sal income.

but he is also getting conveyance allowance in his salary, and he wants to claim Rs 3000 pm as deduction on account of his petrol expenses.

my question is can he claim the deduction for petrol expenses or no ( may be because his perquiste Rs 600 pm covers everything and no other deduction can be allowed for car purpose)

kindly advise

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16 Replies

Amir (Learner) (4016 Points)
Replied 06 February 2010

Dear aashima,

Conveyance allowance is exempt only upto Rs. 800/month or amount of allowance whichever is less

It can be claimed exempt even if Company has provided car to the employee.

Abansal ( Manager) (121 Points)
Replied 06 February 2010

Dear Amir,

Thanks, but Rs 800 pm exemption is for transp allow ( allow for expenses incurred by employee for commuting between place of work and place of residence)

conveyance allo is little different ( expenses incurred by employee for doing the office work using his own vehicle)

now since vehicle is of office, but expenses are incurred by employee for petrol etc , can he claim deduction for expenses

Amir (Learner) (4016 Points)
Replied 06 February 2010

Dear aashima,

It is a well established principle that where Law provides for Notional deduction, the actual amount is not relevant........

So in case of exemption of Rs. 800/month, Law has given a notional limit irrespective of actual amount, therefore even if employees are not incurring any expense for such purpose they are still allowed to take the benefit........

There r so many examples of this principle like 30% deduction in case of rental income under house property, etc

I couldn't get what u have written in the last para, the deduction is notional i:e "conveyance allowance or 800" whichever is less

Abansal ( Manager) (121 Points)
Replied 06 February 2010

amir ,

i want to say that there are 2 things, Transportation allowance for which Rs 800 pm deduction is given

and ther other is Conveyance allowance , for whcih rs 800 pm deduction is not given and for which i am asking the question.

can he get deduction on account of conveyance allowance

Abansal ( Manager) (121 Points)
Replied 06 February 2010

amir ,

i want to say that there are 2 things, Transportation allowance for which Rs 800 pm deduction is given

and ther other is Conveyance allowance , for whcih rs 800 pm deduction is not given and for which i am asking the question.

can he get deduction on account of conveyance allowance

Amir (Learner) (4016 Points)
Replied 06 February 2010

Dear Aashima,

Sec 10(14) says that these allowance may be called by whatever name.......So, the purpose has to be seen, if u r talking about second one then yes no deduction can be claimed since employees are getting the benefits of payments made by them in their valuaton of perks.............

Bimal Thacker (Proprietor) (762 Points)
Replied 06 February 2010

Dear Aashima

No , he can not claim the deduction for petrol expenses, perquiste of Rs 600 pm covers everything and no other deduction can be allowed for car.

I think this question relates only for adjustments. otherwise, If he really incurring such high running and maintenance expenses for office purpose then he should go for other situation of maintenance and running expenses are met or reimbursement by employer i.e. perquisities of Rs. 1200 p.m. or 1600 p.m.

In present situation no deduction

C.Balaji (Learner) (1867 Points)
Replied 06 February 2010

Dear Aashima

He can not claim the deduction for petrol expenses, perquisite of Rs 600 pm covers everything and no other deduction can be allowed for car.

and to Mr.Amir brother...

Is conveyance and transport allowance same???

Transport allowance - Rs.800/month exempt....

Conveyance allowance - official purpose exempt....

please clarify me....

Amir (Learner) (4016 Points)
Replied 06 February 2010

Dear Balaji,

As I have mentioned above that u can give any name to an allowance but the purpose has to be seen, in my initial post I thought that present case is of transport allowance so I answerd it accordingly, but when I got clarification from ashima that she is talking about conveyance allowance then I answered it accordingly..............

Yes u r rite these two alolwances r not same...............

C.Balaji (Learner) (1867 Points)
Replied 06 February 2010

thank you Mr.Amir brother for your immediate reply....

i didn't doubt you but only wanted to clarify me.....

CA Anil Jain (Chartered Accountant) (696 Points)
Replied 12 February 2010

Hello !

I would like to clarify to Mr. Aamir as Convayance Allowance and Transport allowance are two different things as mentioned in section 10(14) read with rule 2BB.

Transport Allowance- is for the purpose of meeting xpenditure inmcurred between place of work and place of residence which is extemp to the extent of Rs. 800 per month.

Conveyance Allowance- is something different given for metting expenditure incurred for discharging the office duties i.e expenses incurred by employee for doing the office work which is allowed to the extent of actual expenditure identifiable for official purpose.

1 Like

Vidya (Accounts Executive) (564 Points)
Replied 02 March 2010

Hi,

Pl clarify the following:

In our office employees are getting reimbursed for commutting between residence to office and back. The amount of reimbursement is the actual amount spent by them (not for private purpose).

Some of the employees use their own car, petrol expenses and driver salary for commuting is reimbursed by company, while some employees use taxi and the actual amount spent by them is reimbused.

In the above case please indicate is the reimbursed amount taxable in the hands of employees or it will be considered for official purpose and nil tax.

Kindly clarify the above at the earliest.

Regards,

Vidya

Amir (Learner) (4016 Points)
Replied 02 March 2010

Dear Vidya

Look, u can call an allowance by any name doesn't matter - what has to seen is the purpose

In Income Tax Act -

1) Transport Allowance - For commuting between Residence & place of work -

        Lower of the following is exempt -
                  a) Amount Received
                  b) Rs. 800/month (In case of Blind/Handicapped Employees - Rs. 1,600/month)

Now in this case actual expenditure is irrelevant, no need to collect bills/undertaking from employees..

2) Conveyance allowance - For performing official duties

           Lower of the following is exempt
                     a) Amount received
                      b) Amount Spent on performing duties

Now, in this case employer should collect proof of expenditure like bills/undertakings,etc

Vidya (Accounts Executive) (564 Points)
Replied 02 March 2010

Dear Amir,

thanks for prompt reply.

however, if an employee use his own car and the employer reimburse the expenses (for commutting and other official work) how to calculate the taxable amount in the hands of employee.