Conveyance

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

12 August 2016 AS PER COMPANY POLICY I HAVE GIVE EMPLOYEE 4500 RS. PETROL ALLOWANCE & 1000 RS. MOBILE ALLOWANCE FIX PER MONTH. THEN THIS IS COMPULSORY TO COLLECT SUCH BILLS FROM THEM. AS PER IT RULES 1600 RS. ALLOWANCE ELIGIBLE FOR EMPLOYEE. IF EMPLOYEE WOULD GIVE COMPLETE BILLS AS PER ABOVE AMOUNT THEN WHAT IS THE CONVEYANCE CRITERIA LIABLE FOR THEM.

Querist : Anonymous

Querist : Anonymous (Querist)

19 August 2016 sir please give me reply of my query

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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20 July 2024 It seems like you're asking about the tax implications and criteria for conveyance allowance based on the allowances provided to employees according to company policy and IT rules in India. Here’s a breakdown of the situation:

### 1. Petrol Allowance and Mobile Allowance:

- **Company Policy:** You have fixed a monthly petrol allowance of Rs. 4,500 and a mobile allowance of Rs. 1,000 for employees.

- **Bill Submission Requirement:** As per your policy, it’s important to clarify whether employees are required to submit bills or receipts for these allowances. Typically, if these allowances are provided on a fixed basis (without the need for actual bills), they may be considered as fixed allowances and not reimbursement of actual expenses.

### 2. IT Rules on Conveyance Allowance:

- **Eligibility:** As per Income Tax rules in India, conveyance allowance is eligible for exemption up to Rs. 1,600 per month (Rs. 19,200 per annum) if it is specifically granted to meet the expenditure incurred on conveyance in performance of duties of an office or employment.

- **Submission of Bills:** For conveyance allowance to be eligible for tax exemption, the employee needs to submit bills or receipts for actual conveyance expenses incurred. However, if the allowance provided exceeds Rs. 1,600 per month and the employee does not submit bills for actual expenses, the excess amount will be taxable.

### 3. Criteria for Tax Exemption:

- **Exemption Limit:** Up to Rs. 1,600 per month of conveyance allowance can be exempt from tax if supported by bills or receipts for actual conveyance expenses.

- **Taxable Portion:** Any amount above Rs. 1,600 per month, or the entire allowance if no bills are submitted, will be considered taxable income for the employee.

### Conclusion:

- **Policy Enforcement:** As per your company policy, if you provide fixed petrol and mobile allowances without requiring employees to submit bills, these may be treated as fixed allowances and not subject to tax exemption under conveyance rules.

- **Tax Implications:** If employees submit bills for conveyance expenses up to Rs. 1,600 per month, only this amount would be eligible for tax exemption. Any excess allowance or amounts without bills would be taxable income.

It’s important to review your company’s policies and ensure they comply with Income Tax regulations regarding allowances and reimbursements. Consulting with a tax advisor or HR specialist familiar with Indian tax laws can provide further guidance tailored to your specific situation and ensure compliance.

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