Transport allowance u/s 10

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Querist : Anonymous

Querist : Anonymous (Querist)

05 April 2018 As you are all aware budget for 2018 has been enacted. Transport allowance Rs.19200/- ( Rs.1600 X 12) earlier exempt from Tax . However, as per new finance act the exemption has been withdrawn. Can any one help me in finding out the amendment in the official gazette with the relevant section.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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05 April 2018 Not in section. It will be through amendment in rule 2BB(2).

KAVIRAJA ADDANGADI

KAVIRAJA ADDANGADI (Expert)
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05 April 2018 For 2018 Standard deduction of Rs.40000/- introduced eplaces medical allowance of Rs 15,000 and transport allowance of Rs 1600 per month i.e. 19,200 per annum, the effective additional benefit on account of the standard deduction would be an additional income exemption of Rs 5,800.

Expert : Anonymous

Expert : Anonymous (Expert)

05 April 2018 Yes... I agreed to Mr KAVIRAJA ADDANGADI Sir.. Also we can get additional benefit Rs 5800 as per New Amendment... By RAJA P M

Querist : Anonymous

Querist : Anonymous (Querist)

05 April 2018 Thank u so much, Rule 2BB(2). The exemption provided under s.no.10.However withdrawal of exemption not mentioned in
proviso. Kindly clarify.

Querist : Anonymous

Querist : Anonymous (Querist)

06 April 2018 Finance Act missed to amend Rule 2BB(2). A separate notification may be given effecting the same.

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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02 August 2025 Here's a summary of the **Transport Allowance exemption changes under section 10** around the 2018 budget:

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### What happened?

* Earlier, **Transport Allowance** up to **Rs. 1,600 per month (Rs. 19,200 per annum)** was exempt from tax under **Section 10(14)** read with **Rule 2BB(2)** of the Income Tax Rules.
* In the **Finance Act 2018**, this exemption for transport allowance was **withdrawn**.
* Instead, a **Standard Deduction of Rs. 40,000** per annum was introduced for salaried employees, replacing earlier exemptions like **Medical Allowance** and **Transport Allowance** exemptions.

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### Where is this change reflected legally?

* The **exemption withdrawal** for Transport Allowance was **not directly mentioned in the Income Tax Act’s section 10**, but through the **amendment in Rule 2BB(2)** of the Income Tax Rules.
* However, the 2018 Finance Act **did not explicitly amend Rule 2BB(2)** immediately; the withdrawal was intended to be implemented through a **separate notification or amendment**.
* So, effectively:

* The **Transport Allowance exemption was removed by withdrawing or amending Rule 2BB(2)**.
* The **Standard Deduction (Rs. 40,000)** was introduced under **Section 16(iiia)** of the Income Tax Act.

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### Summary:

| Before Budget 2018 | After Budget 2018 |
| ------------------------------------------------------------------ | --------------------------------------------------------------------- |
| Transport Allowance exemption of Rs. 19,200 p.a. under Rule 2BB(2) | Transport allowance exemption withdrawn (rule amended/notified later) |
| Medical Allowance exemption Rs. 15,000 | Medical allowance exemption withdrawn |
| No standard deduction | Standard deduction of Rs. 40,000 introduced under Section 16(iiia) |

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### For official references:

* **Finance Act 2018** (Section 16(iiia)) introduces Standard Deduction.
* **Rule 2BB(2)** of Income Tax Rules is amended or to be amended via a notification withdrawing transport allowance exemption.
* Check the **Income Tax Notifications of 2018** for formal withdrawal of the exemption.

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If you want, I can help locate the exact Finance Act text or notification references for you. Would you like me to?

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