maximum travel allowance

Would you like to view this website in another language?

Travel allowance: A Comprehensive Guide for Employees

• Written by: Rinaily Bonifacio
• Last updated: 11 March 2024

This article will explain travel allowance, when and how you can use it, and tips for getting the most out of your expenses.

Table of contents

What is travel allowance?

How does business travel allowance usually cover, what is a flat travel allowance, what is the daily allowance, easy ways on how companies manage their procedures for business travel allowances, effective communication, how to manage business travel allowances.

Travel allowance is a type of compensation employers provide to cover employee travel expenses incurred when traveling for business purposes. It helps with employee travel costs, such as transportation, lodging, meals, and other incidentals while on the job. Depending on the company policy, travel allowance may be given in cash or as reimbursed expenses.

For example, some companies provide a fixed daily amount for meals and lodging that employees can use during their travels. Other companies cover expenses incurred by employees when they submit receipts after their trip has ended. This is known as per diem allowance or transport allowance.

Business travel allowance typically covers the cost of airfare, hotel accommodations, and meals. It may also include per diem allowances such as ground transportation, parking, and incidentals. The exact coverage will vary depending on the company's policies and the type of business trip.

A flat travel allowance is a set amount of money an employee provides for travel costs. The employee is responsible for managing the funds and ensuring they are used for the intended purpose. This allowance is typically used for short trips or employees who travel infrequently.

Employee scheduling and Time-tracking software!

• Easy Employee scheduling
• Clear time-tracking
• Simple absence management

A daily allowance, also known as a per diem, is a set amount of money provided to employees for money incurred daily while traveling for business purposes. It typically covers things such as

• Transportation
• And incidentals.

The allowance amount is usually based on the location and duration of the business trip and is intended to cover living costs for that specific location.

Daily allowances are provided in addition to other travel compensation types, such as lodging or airfare reimbursement. The amount and coverage of a daily budget will vary depending on the company's policies and the nature of the business travel.

Companies can manage their procedures for business travel allowances by establishing clear guidelines and policies. This should include information on who is eligible for the assistance, what travel costs are covered, and how to submit expense reports. Additionally, companies can use travel management software to track and approve payments and ensure company policy compliance.

It is also essential for companies to communicate effectively with employees about travel allowance policies so that they are aware of their rights and obligations. This can include providing training and support and regular updates on any policy changes.

By managing their procedures for business travel allowances in a clear and organized manner, companies can ensure that their employees have the resources they need to complete their business trips while also managing the company's expenses.

Another critical aspect of managing business travel allowances is to keep an eye on the per diem rates and lodging expenses. It is essential to ensure that these expenses are within the budget and are in line with the rates established by the General Services Administration (GSA). Companies should also consider implementing a system for meal allowance and car hire reimbursement, as well as for laundry services, parking fees, and other miscellaneous expenses.

To manage business travel allowances effectively, companies should establish clear guidelines for employees traveling within the continental United States and those traveling to foreign countries. This includes setting a budget for each travel and providing employees with the necessary forms for expense reporting and reimbursement.

In addition, companies can use data analysis to identify trends and patterns in travel expenses. This can help them make more informed decisions about travel policies and budgeting and potentially save money on future trips.

It's also important to consider the needs of business travelers and their families and to establish policies that support them. For example, companies may offer additional allowances for family members traveling with a business traveler or for international travel.

Overall, an efficient reimbursement system and clear travel policies can help ensure that employees are promptly reimbursed for their expenses and that the company's expenses are tracked and managed effectively. This can be a great way to manage business travel allowances and keep costs under control.

Written by:

Rinaily Bonifacio

Rinaily is a renowned expert in the field of human resources with years of industry experience. With a passion for writing high-quality HR content, Rinaily brings a unique perspective to the challenges and opportunities of the modern workplace. As an experienced HR professional and content writer, She has contributed to leading publications in the field of HR.

Please note that the information on our website is intended for general informational purposes and not as binding advice. The information on our website cannot be considered a substitute for legal and binding advice for any specific situation. While we strive to provide up-to-date and accurate information, we do not guarantee the accuracy, completeness and timeliness of the information on our website for any purpose. We are not liable for any damage or loss arising from the use of the information on our website.

Ready to try Shiftbase for free?

• Whistleblowing Policy
• First Aid in the Workplace
• Cell Phone Policy at Work
• Inclement Weather Policy
• Employee Non-disclosure Agreement

An official website of the United States government

Here’s how you know

Official websites use .gov A .gov website belongs to an official government organization in the United States.

Secure .gov websites use HTTPS A lock ( ) or https:// means you’ve safely connected to the .gov website. Share sensitive information only on official, secure websites.

• Explore sell to government
• Ways you can sell to government
• How to access contract opportunities
• Conduct market research
• Register your business
• Certify as a small business
• Become a schedule holder
• Market your business
• Research active solicitations
• Respond to a solicitation
• What to expect during the award process
• Comply with contractual requirements
• Handle contract modifications
• Monitor past performance evaluations
• Explore real estate
• 3D-4D building information modeling
• Art in architecture | Fine arts
• Computer-aided design standards
• Commissioning
• Design excellence
• Engineering
• Project management information system
• Spatial data management
• Facilities operations
• Smart buildings
• Tenant services
• Utility services
• Water quality management
• Explore historic buildings
• Heritage tourism
• Historic preservation policy, tools and resources
• Historic building stewardship
• Videos, pictures, posters and more
• NEPA implementation
• Courthouse program
• Land ports of entry
• Prospectus library
• Regional buildings
• Renting property
• Visiting public buildings
• Real property disposal
• Reimbursable services (RWA)
• Rental policy and procedures
• Site selection and relocation
• For businesses seeking opportunities
• For federal customers
• For workers in federal buildings
• Explore policy and regulations
• Acquisition management policy
• Aviation management policy
• Information technology policy
• Real property management policy
• Relocation management policy
• Travel management policy
• Vehicle management policy
• Federal acquisition regulations
• Federal management regulations
• Federal travel regulations
• GSA acquisition manual
• Managing the federal rulemaking process
• Explore small business
• Explore business models
• Research the federal market
• Forecast of contracting opportunities
• Events and contacts
• Explore travel
• Per diem rates
• Transportation (airfare rates, POV rates, etc.)
• State tax exemption
• Travel charge card
• Conferences and meetings
• E-gov travel service (ETS)
• Travel category schedule
• Federal travel regulation

Travel policy

• Explore technology
• Cloud computing services
• Cybersecurity products and services
• Data center services
• Hardware products and services
• Professional IT services
• Software products and services
• Telecommunications and network services
• Work with small businesses
• Governmentwide acquisition contracts
• MAS information technology
• Software purchase agreements
• Cybersecurity
• Digital strategy
• Emerging citizen technology
• Federal identity, credentials, and access management
• Mobile government
• Technology modernization fund
• Explore about us
• Annual reports
• Mission and strategic goals
• Role in presidential transitions
• Get an internship
• Launch your career
• Elevate your professional career
• Discover special hiring paths
• Events and training
• Agency blog
• Congressional testimony
• GSA does that podcast
• News releases
• Leadership directory
• Staff directory
• Office of the administrator
• Federal Acquisition Service
• Public Buildings Service
• Staff offices
• Board of Contract Appeals
• Office of Inspector General
• Region 1 | New England
• Region 2 | Northeast and Caribbean
• Region 3 | Mid-Atlantic
• Region 4 | Southeast Sunbelt
• Region 5 | Great Lakes
• Region 6 | Heartland
• Region 7 | Greater Southwest
• Region 8 | Rocky Mountain
• Region 9 | Pacific Rim
• Region 10 | Northwest/Arctic
• Region 11 | National Capital Region
• Per Diem Lookup

Travel resources

Per diem look-up, 1 choose a location.

Error, The Per Diem API is not responding. Please try again later.

No results could be found for the location you've entered.

Rates for Alaska, Hawaii, U.S. Territories and Possessions are set by the Department of Defense .

Rates for foreign countries are set by the State Department .

2 Choose a date

Rates are available between 10/1/2021 and 09/30/2024.

The End Date of your trip can not occur before the Start Date.

Traveler reimbursement is based on the location of the work activities and not the accommodations, unless lodging is not available at the work activity, then the agency may authorize the rate where lodging is obtained.

Unless otherwise specified, the per diem locality is defined as "all locations within, or entirely surrounded by, the corporate limits of the key city, including independent entities located within those boundaries."

Per diem localities with county definitions shall include "all locations within, or entirely surrounded by, the corporate limits of the key city as well as the boundaries of the listed counties, including independent entities located within the boundaries of the key city and the listed counties (unless otherwise listed separately)."

When a military installation or Government - related facility(whether or not specifically named) is located partially within more than one city or county boundary, the applicable per diem rate for the entire installation or facility is the higher of the rates which apply to the cities and / or counties, even though part(s) of such activities may be located outside the defined per diem locality.

City Pair airfares

Visit City Pair Program to learn about its competitive, federally-negotiated airline rates for 7,500+ domestic and international cities, equating to over 13,000 city pairs.

• Search for contract fares

Note: All fares are listed one-way and are valid in either direction. Disclaimer - taxes and fees may apply to the final price

Taxes and fees may apply to the final price

Your agency’s authorized travel management system will show the final price, excluding baggage fees. Commercial baggage fees can be found on the Airline information page.

Domestic fares include all existing Federal, State, and local taxes, as well as airport maintenance fees and other administrative fees. Domestic fares do not include fees such as passenger facility charges, segment fees, and passenger security service fees.

International

International fares do not include taxes and fees, but include fuel surcharge fees.

Note for international fares: City codes, such as Washington (WAS), are used for international routes.

Federal travelers should use their authorized travel management system when booking airfare.

• E-Gov Travel Service for civilian agencies.
• Defense Travel System for the Department of Defense.

If these services are not fully implemented, travelers should use these links:

• Travel Management Center for civilian agencies.
• Defense Travel Management Office for the Department of Defense.

GSA lodging programs

Shop for lodging at competitive, often below-market hotel rates negotiated by the federal government.

FedRooms provides federal travelers on official business with FTR compliant hotel rooms for transient and extended stays (up to 29 days). The program uses FEMA and ADA-compliant rooms with flexible booking terms at or below per diem rates. Federal employees should make reservations, including FedRooms reservations, via their travel management service.

Visit GSALodging for more details on FedRooms and for additional programs offering meeting space, long term lodging, and emergency lodging.

Privately owned vehicle (POV) mileage reimbursement rates

GSA has adjusted all POV mileage reimbursement rates effective January 1, 2024.

* Airplane nautical miles (NMs) should be converted into statute miles (SMs) or regular miles when submitting a voucher using the formula (1 NM equals 1.15077945 SMs).

For calculating the mileage difference between airports, please visit the U.S. Department of Transportation's Inter-Airport Distance website.

Plan a trip

Research and prepare for government travel.

Per diem, meals & incidental expenses (M&IE) Passenger transportation (airfare rates, POV rates, etc.) Lodging Conferences/meetings Travel charge card State tax exemption

Services for government agencies

Programs providing commercial travel services.

Travel Category Schedule (Schedule L) E-Gov Travel Service (ETS) Emergency Lodging Services (ELS) Employee relocation

Travel reporting

Federal Travel Regulation Table of contents Chapter 300—General Chapter 301—Temporary Duty (TDY) Travel allowances Chapter 302 - Relocation allowances

LTA (Leave Travel Allowance): Meaning, Rules, Tax Exemptions and Conditions to claim

Hiral Vakil

Travelling offers a wide range of benefits. Taking time away from daily routine can reduce stress and improve mental and emotional well-being. However, vacations can be expensive. Income Tax provides various exemptions on such expenses to salaried individuals. One such exemption available is LTA i.e. Leave Travel Allowance. LTA is an allowance employers give to their staff for vacations in India.

LTA: Meaning

Conditions to claim lta exemption, leave travel exemption: eligibility, how to claim exemption on leave travel allowance.

Leave Travel Allowance is an allowance employers give to their employees as a part of CTC for travelling alone or with family to any place in India : 

• either on leave or
• after retirement from service or
• after termination of service.

Income tax has laid down rules for claiming exemption of LTA.

Section 10(5) of the Income Tax Act along with Rule 2B has prescribed the conditions and limit of exempt leave travel allowance.

• Leave travel allowance should be a part of the employee’s salary structure.
• An exemption is available for actual expenses incurred by the employee including their family for domestic travel only.
• Spouse and children
• Parents, brothers, and sisters who are wholly or mostly dependent on the employee.
• Further, this exemption can be claimed for a maximum of two children born after 01/10/1998. For children born prior to this date, there is no restriction.
• It covers only the cost of travel for the trip (travel by rail, air or any other public transport). It does not cover the cost of hotel accommodation, food, etc.
• An exemption is available only for two trips in a block of four calendar years . The current block for leave travel is from 2022 to 2025.
• If an exemption is not availed during the block period, it can be carried over to the next block and used in the first year of the next block.

Let’s understand with an example:

Let’s say, an employee does not avail Leave Travel allowance for the block of 2018-2021. He is allowed to carry forward a maximum of one unavailed LTA to be used in the succeeding block of 2022-2025. Accordingly, if he avails LTA in April 2022, the same will be considered for the block of 2018-2021. Therefore, he will be eligible for exemption in respect of that journey and two more journeys can be further availed in respect of the block 2022-2025.

The LTA exemption is available only on the actual travel costs. Expenses such as sightseeing, hotel accommodation, food, etc are not eligible for this exemption. It is also limited to the LTA provided by the employer. For example: If the actual expense incurred is INR 50,000 but LTA as part of Salary is INR 35,000 then the maximum exemption available would be INR 35,000 only.

Exemption when various modes of transport are used for travel

Employees can claim Leave Travel Allowance exemption by submitting details in Form 12BB . They should submit the proof in support of their claim. Further employees can submit boarding passes, air tickets, train tickets, invoices from travel agents, etc, as documentary proof to their employers.

No, LTA can be claimed only for domestic travel. You can only claim LTA if the Employer provides it as part of your salary.

If an employee travels to different locations on a single vacation then the exemption available will be for the travel cost eligible from the place of origin to the farthest location by the shortest route possible.

It depends on the organisation’s policies as many companies allow LTA exemption only if employees take specific leave for vacation and not on official holidays or weekends.

No, You can claim LTA exemption only twice in a block of 4 calendar years. The current block of four years is 2022-2025.

Employees are advised to maintain proof such as flight tickets, invoices from travel agents, passes, etc. as they have to be submitted to the employer.

Employees can know the exempt Leave Travel Allowance amount from Form 16 issued by the employer at the end of the financial year. It is exempt u/s 10(5) of the Income Tax Act.

Since Leave Travel Allowance is a part of salary income, an employee can file ITR-1 while claiming exempt LTA. However, salaried need to file ITR-2 if their income is more than Rs. 50,00,000.

Got Questions? Ask Away!

Hey @sushil_verma

There are a wide range of deductions that you can claim. Apart from Section 80C tax deductions, you could claim deductions up to INR 25,000 (INR 50,000 for Senior Citizens ) buying Mediclaim u/s 80D. You can claim a deduction of INR 50,000 on home loan interest under Section 80EE.

Hey @Dia_malhotra , there are many deductions that you can avail of. Your salary package may include different allowances like House Rent Allowance (HRA) , conveyance , transport allowance, medical reimbursement , etc. Additionally, some of these allowances are exempt up to a certain limit under section 10 of the Income Tax Act.

• Medical allowance is exempt up to INR 15,000 on a reimbursement basis.
• Children education allowance is exempt up to Rs. 200 per child per month up to a maximum of two children.
• Conveyance allowance is exempt up to a maximum of Rs. 1600 per month.

Tax on employment and entertainment allowance will also be allowed as a deduction from the salary income. Employment tax is deducted from your salary by your employer and then it is deposited to the state government.

The benefit Section 80EEB can be claimed by individuals only. An individual taxpayer can claim interest on loan of an electric vehicle of up to INR 1.5 lacs u/s 80EEB. However, if the electric vehicle is used for the purpose of business, the vehicle should be reported as an asset, loan should be reported as a liability and the interest on loan can be claimed as a business expense irrespective of the amount. (We have updated the article with the changes).

Thus, if you have a proprietorship business, you should claim interest amount as a business expense only if the vehicle is used for business purpose. However, if it is used for personal purpose, you can claim deduction of interest u/s 80EEB in your ITR since you would be reporting both personal and business income in the ITR (under your PAN).

As per the Income Tax Act, the deduction under Section 80EEB is applicable from 1st April 2020 i.e. FY 2020-21.

No issues. You’re welcome!

Hey @shindeonkar95

In case of capital gain income (LTCG/STCG), transfer expenses are allowed as deduction, except STT.

However, in case of business income (F&O, intraday), all expenses incurred for the business (including STT) are eligible to claim deduction in ITR.

Hope, it helps!

Is it possible to claim deductions under S. 80CCF for Infra bonds bought in the secondary market and held to maturity?

There were a number of 10 year infra bonds issued in the 2010- 2013 period, which will start maturing soon. These are all listed on the exchanges (although hardly any liquidity or transactions in them). If I were to buy some of these bonds in the open markets and hold them in my demat to maturity (<3 years), is it possible to claim tax deductions (upto 20k per year) under 80CCF for buying?

I couldn’t find anything on this. Any help is appreciated.

Hello @Veejayy ,

Yes you can claim deduction under 80CCF for investment made in specified infrastructure and other tax saving bonds bought in the secondary market and held to maturity.

Deduction under Section 80CCF can be availed only through investment in certain tax saving bonds, issued by banks or corporations after gaining permission from the government which shall be restricted upto 10,000 per year.

These bonds are generally long term bonds, having tenure of more than 5 years with a lock in period of 5 years in most of the cases. These bonds can be sold after the lock in period!

Also, interest earned on these bonds will be taxable.

Hope this helps!

Hi, I need to file my income tax for FY21, I am using Quicko platform for filing, I wanted to confirm if the ELSS investment amount for the FY21 is to be added in the section 80C, since I already the amount of Rs30,072 , should I add my ELSS amount to this existing amount and submit the total

Hey @Sheirsh_Saxena , yes, the investment amount needs to be added under 80C.

Continue the conversation on TaxQ&A

87 more replies

Participants

Last Updated on 5 months by Shreya Sharma

An official website of the United States Government

• Kreyòl ayisyen
• Search Toggle search Search Include Historical Content - Any - No Include Historical Content - Any - No Search
• Menu Toggle menu
• INFORMATION FOR…
• Individuals
• Business & Self Employed
• Charities and Nonprofits
• International Taxpayers
• Federal State and Local Governments
• Indian Tribal Governments
• Tax Exempt Bonds
• FILING FOR INDIVIDUALS
• How to File
• When to File
• Where to File
• Update Your Information
• Get Your Tax Record
• Apply for an Employer ID Number (EIN)
• Check Your Amended Return Status
• Get an Identity Protection PIN (IP PIN)
• File Your Taxes for Free
• Bank Account (Direct Pay)
• Payment Plan (Installment Agreement)
• Electronic Federal Tax Payment System (EFTPS)
• Your Online Account
• Tax Withholding Estimator
• Estimated Taxes
• Where's My Refund
• What to Expect
• Direct Deposit
• Reduced Refunds
• Amend Return

Credits & Deductions

• INFORMATION FOR...
• Businesses & Self-Employed
• Earned Income Credit (EITC)
• Child Tax Credit
• Clean Energy and Vehicle Credits
• Standard Deduction
• Retirement Plans

Forms & Instructions

• POPULAR FORMS & INSTRUCTIONS
• Form 1040 Instructions
• Form 4506-T
• POPULAR FOR TAX PROS
• Form 1040-X
• Circular 230

Topic no. 511, Business travel expenses

More in help.

• Interactive Tax Assistant
• Report Phishing
• Fraud/Scams
• Notices and Letters
• Frequently Asked Questions
• Accessibility
• Contact Your Local IRS Office
• Contact an International IRS Office
• Other Languages

Travel expenses are the ordinary and necessary expenses of traveling away from home for your business, profession, or job. You can't deduct expenses that are lavish or extravagant, or that are for personal purposes.

You're traveling away from home if your duties require you to be away from the general area of your tax home for a period substantially longer than an ordinary day's work, and you need to get sleep or rest to meet the demands of your work while away.

Generally, your tax home is the entire city or general area where your main place of business or work is located, regardless of where you maintain your family home. For example, you live with your family in Chicago but work in Milwaukee where you stay in a hotel and eat in restaurants. You return to Chicago every weekend. You may not deduct any of your travel, meals or lodging in Milwaukee because that's your tax home. Your travel on weekends to your family home in Chicago isn't for your work, so these expenses are also not deductible. If you regularly work in more than one place, your tax home is the general area where your main place of business or work is located.

In determining your main place of business, take into account the length of time you normally need to spend at each location for business purposes, the degree of business activity in each area, and the relative significance of the financial return from each area. However, the most important consideration is the length of time you spend at each location.

You can deduct travel expenses paid or incurred in connection with a temporary work assignment away from home. However, you can't deduct travel expenses paid in connection with an indefinite work assignment. Any work assignment in excess of one year is considered indefinite. Also, you may not deduct travel expenses at a work location if you realistically expect that you'll work there for more than one year, whether or not you actually work there that long. If you realistically expect to work at a temporary location for one year or less, and the expectation changes so that at some point you realistically expect to work there for more than one year, travel expenses become nondeductible when your expectation changes.

Travel expenses for conventions are deductible if you can show that your attendance benefits your trade or business. Special rules apply to conventions held outside the North American area.

Deductible travel expenses while away from home include, but aren't limited to, the costs of:

• Travel by airplane, train, bus or car between your home and your business destination. (If you're provided with a ticket or you're riding free as a result of a frequent traveler or similar program, your cost is zero.)
• The airport or train station and your hotel,
• The hotel and the work location of your customers or clients, your business meeting place, or your temporary work location.
• Shipping of baggage, and sample or display material between your regular and temporary work locations.
• Using your car while at your business destination. You can deduct actual expenses or the standard mileage rate, as well as business-related tolls and parking fees. If you rent a car, you can deduct only the business-use portion for the expenses.
• Lodging and non-entertainment-related meals.
• Dry cleaning and laundry.
• Business calls while on your business trip. (This includes business communications by fax machine or other communication devices.)
• Tips you pay for services related to any of these expenses.
• Other similar ordinary and necessary expenses related to your business travel. (These expenses might include transportation to and from a business meal, public stenographer's fees, computer rental fees, and operating and maintaining a house trailer.)

Instead of keeping records of your meal expenses and deducting the actual cost, you can generally use a standard meal allowance, which varies depending on where you travel. The deduction for business meals is generally limited to 50% of the unreimbursed cost.

If you're self-employed, you can deduct travel expenses on Schedule C (Form 1040), Profit or Loss From Business (Sole Proprietorship) , or if you're a farmer, on Schedule F (Form 1040), Profit or Loss From Farming .

If you're a member of the National Guard or military reserve, you may be able to claim a deduction for unreimbursed travel expenses paid in connection with the performance of services as a reservist that reduces your adjusted gross income. This travel must be overnight and more than 100 miles from your home. Expenses must be ordinary and necessary. This deduction is limited to the regular federal per diem rate (for lodging, meals, and incidental expenses) and the standard mileage rate (for car expenses) plus any parking fees, ferry fees, and tolls. Claim these expenses on Form 2106, Employee Business Expenses and report them on Form 1040 , Form 1040-SR , or Form 1040-NR as an adjustment to income.

Good records are essential. Refer to Topic no. 305 for information on recordkeeping. For more information on these and other travel expenses, refer to Publication 463, Travel, Entertainment, Gift, and Car Expenses .

•  Facebook
•  Twitter
•  Linkedin

Travel Allowance: Meaning, Rules & More

What is travel allowance.

An employee may receive a travel allowance from their employer to help cover the costs associated with work travel. This kind of allowance is usually given on top of an employee's base pay or salary and is intended to cover the costs of business travel. The amount of travel reimbursement may differ based on the employer's policies, the nature and length of the journey, and the destination.

What are the Types of Travel Allowances?

Depending on the nature of the job, travel frequency, budget constraints of the company, and more such factors, different types of travel allowances can be offered to an employee.

1. Fixed Travel Allowance

A fixed travel allowance in salary implies that this is a fixed amount offered to the employee irrespective of the actual expenses incurred.

2. Daily Travel Allowance

As the name suggests, a daily travel allowance is offered to employees on a per-day basis, which covers their travel, meals, accommodation, and other such expenses.

3. Mileage Allowance

Employers can also provide a miles-based travel allowance to their employees, which depends on the number of miles they travel for business.

4. Travel Reimbursement

A travel reimbursement depends on the actual expense proofs submitted by an employee, which can include travel by air, rail or road.

The type of travel allowance offered by an employer may depend on various factors such as the nature of the job, frequency of travel, and budget constraints.

What are the Rules Applicable for Travel Allowance?

In India, there are specific tax rules governing travel allowances. Some of the basic travel allowance rules applicable to employees are as follows:

Exemption Limit

The exemption limit for travel allowances is determined by the Indian government and is subject to change. The exemption limit for travel allowance in India is ₹1,600 per month or ₹19,200 per year, as per FY 2022-2023. Read about taxation related to business travel in this blog .

Proof of Travel

The employer needs to provide proof of travel to claim the travel allowance, such as travel tickets, boarding passes, etc.

Actual Expenses

According to the travel allowance rules, if the amount of travel allowance exceeds the actual expenses incurred by the employee during travel, the excess amount is liable for a tax deduction.

Tax Deducted at Source (TDS)

If the amount of travel allowance in salary exceeds the exemption limit, the excess amount is subject to TDS, at a rate of 5%.

Clubbing with Salary

The travel allowance is considered a part of the employee's salary and is subject to taxation accordingly.

Both employers and employees need to understand tax-related travel allowance rules. Employees must keep proper records of travel expenses and provide valid proof to claim the exemption. Employers should also ensure that they deduct TDS at the correct rate and report the travel allowance as a part of the employee's salary in their tax returns.

In conclusion

In conclusion, travel allowances are provided by employers to cover the expenses associated with work travel. Different types of travel allowances, such as fixed allowances, daily allowances, mileage allowances, and travel reimbursements, may be offered based on various factors. It is important for both employers and employees to understand the tax rules and regulations governing travel allowances, including exemption limits, proof of travel, taxation on excess amounts, TDS deductions, and the inclusion of travel allowances in the employee's salary. Compliance with these rules ensures proper documentation and accurate reporting of travel allowances for taxation purposes.

Frequently Asked Questions

1. is travel allowance fully exempted.

If the tax allowance amount in an employee’s CTC structure is less than ₹1,600, then the entire allowance would be tax-free. Anything above that is applicable for a standard tax deduction.

2. How do you use travel allowance?

Employees can use travel allowance by opting for road, rail, or air travel within the country.

3. Is travel allowance part of the salary?

Yes, an employer pays a travel allowance in salary to cover the employee's travel expenses. Travel allowance is part of an employee’s cost-to-company and can be claimed annually.

4. Who can claim a travel allowance?

According to the travel allowance rules, employees can claim the allowance to meet travel-related expenses. The eligibility for claiming travel allowance depends on the company's policies, the nature of the employer’s job, and more such factors.

New to Tax? Start Here

• Do I need to submit a tax return?
• Salaried tax payers
• Provisional tax
• Independent contractors
• Small business (sole proprietors)

Living or Working Overseas

• Foreign employment income
• Foreign trade income
• Other foreign income

Earning Extra Income

• Rental income
• Capital gains tax
• Tax on Investments - What you need to know

Claiming & Deductions

• What can I claim
• Wear & tear / depreciation
• Travel expenses
• Medical expenses
• Donations tax

SARS & eFiling

• How to register
• How to get my tax number
• How to make a payment via eFiling
• How to register for provisional tax

After You File

• Amending details
• Tracking your refund

Company (Pty) Tax

• Company tax guide
• Turnover tax explained
• Register a company for eFiling

Quicks Links

• Tax definitions
• Guides & tutorials
• Tax questions & answers
• Main tax help page
• Ask a tax question
• Tax & Retirement- What you need to know

Maximum allowable travel allowance

Blog categories.

• Salary / IRP5 (4,694 posts)
• Independent Contractor (989 posts)
• Provisional Tax (660 posts)
• Medical (967 posts)
• Capital Gains (408 posts)
• Donations (245 posts)
• Deductions (3,809 posts)
• Commission (1,052 posts)
• Rental Income (967 posts)
• Retirement (1,042 posts)
• Dividends (1,043 posts)
• Depreciation / Wear and Tear (350 posts)
• Penalties (779 posts)
• Travel Allowance (769 posts)
• Audit / Verification (2,663 posts)
• Tax Threshold (496 posts)
• Foreign employment income (202 posts)
• SARS & eFiling (2,101 posts)
• Company Tax (1 posts)
• PAYE & UIF (41 posts)
• Source Code (2 posts)
• TaxTim in the Media (1 posts)
• Tax Tables (2 posts)
• Financial Literacy Series (3 posts)
• Cryptocurrency (3 posts)
• Auto-Assessments (1 posts)

Thank you for signing up!

AI Summary to Minimize your effort

Transport Allowance for Salaried Employees - Meaning, Exemption, Calculation, Rules

Updated on : Mar 19th, 2024

11 min read

Transport Allowance is an allowance a company or employer provides to employees to compensate for their travel from their residence to the workplace. It is a type of special allowance. Like other allowances, transport allowance is a part of CTC and has fixed pay.

As the employee’s income tax computation is done by their employers for tax deduction purposes, salaried taxpayers may or may not be very concerned about their salary structuring and details of various kinds of allowances and exemptions available to them even before arriving at gross total income. However, understanding allowances and exemptions provided on such allowances is also significant for tax planning. This helps them choose the right CTC structure and lawfully claim the tax benefit to which they are entitled. Additionally the availability of the exemption depends on the tax regime chosen by the taxpayer.

This article will discuss one such allowance, i.e., transport allowance and its tax provisions.

What is Transport Allowance?

Transport allowance could mean allowance provided for the purpose of transport from residence to the place of work . However, transport allowance under Section 10(14) of Income-tax Act,1961 read with rule 2BB of Income-tax rules can be either of the following:

• Allowance granted to an employee to meet his expenditure for the purpose of commuting between his place of residence and office/place of duty
• Allowance granted to an employee working in the transport business to meet his personal expenditure during his duty performed in the course of running such transport from one place to another place provided the employee is not in receipt of daily allowance

Transport allowance is taxable in the hands of the employee since it is added to their gross salaries. However, employees can claim tax exemption for transport allowance as per the exemption limit.

Quantum of Exemption

Section 10(14) read with Rule 2BB provides for transport allowance exemption. The amount of exemption is as follows:

Changes by Finance Act, 2018

From the financial year 2018-2019, the tax exemption for medical and transport allowances has been merged. The Income Tax Department introduced a standard deduction in place of transport and medical allowance. From the financial year 2019-2020, the standard deduction is Rs 50,000, which covers the transport and medical allowance.  

Thus, employees can claim the deduction of Rs 50,000 while filing their ITR without producing any bills or documents. Employers will consider the standard deduction to compute the net taxable salary while calculating the TDS. This change shall take effect from the financial year 2018-19. Accordingly, no separate transport allowance of Rs 1,600 per month is available to employees other than physically challenged employees and employees of a transport business.   The limit of Rs 40,000 has been increased to Rs 50,000 in the Interim Budget 2019. Know the highlights of the Interim Budget 2019 here.

Difference Between Transport Allowance and Conveyance Allowance

A transport allowance is an allowance given to meet commuting expenses between the place of residence and office or to meet the personal expenditure of an employee of a transport business.

A conveyance allowance is an allowance granted to meet the expenditure on conveyance in the performance of office duty.

Transport allowance is fully taxable for all employees in both regimes. However it is exempt under both tax regimes to the extent of 3,200 per month for the employees who are physically challenged such as blind/deaf/dumb or orthopedically handicapped with disability of lower extremities. C onveyance allowance is exempt from tax only to the extent of actual expenditure incurred.

Illustration

Let us derive the taxable income of an employee for the FY 2017-18, FY 2018-19, FY 2019-20 and onwards.

Let us look the same illustration for an employee who is specially abled.

Transport Allowance Under the New Tax Regime 

From the FY 2020-21, the government introduced the new tax regime for individual and HUF taxpayers under section 115BAC. In the new tax regime, there are flat tax rates and no deductions or exemptions. For example, an individual opting for the new tax regime cannot claim exemptions for HRA and others. Also, the individual cannot claim deductions for any tax-saving investments. However, the new tax regime allows an individual to claim the following tax-exempt allowances:

• Allowance by the employer to meet the cost of travel on tour or transfer. It includes an allowance towards the cost of travel, such as airfare, rail fare and other transportation costs.
• Any allowance by the employer to meet the ordinary daily charges incurred by an employee on account of absence from the usual place of duty. The allowance should be in respect of the tour or for the period of the journey in connection with a transfer. The allowance includes expenses an employee incurs for food and other daily costs while travelling.  
• Allowance to meet conveyance expense incurred while performing duties of an office or employment of profit. However, in this case, the employer should not provide a free conveyance to the employee. The allowance includes travelling expenses an employee incurs while performing official duties.

In the case of an employee who is blind, deaf and dumb, or orthopedically handicapped, with a disability of lower extremities can claim transport allowance to meet expenditure on commuting between residence and the place of duty. The benefit is up to Rs 3,200 per month. The same would be fully taxable in the case of an employee with no disabilities.

How to Claim Transport Allowance While Filing Income Tax Return for an employee who is specially abled ?

Usually, employers take care of the tax exemption on transport allowance while deducting TDS from the paycheck. In such cases, employees have to enter the amount mentioned in Form 16 part B in the ‘Income from Salary’ column of their ITR Form .

But when an employer has given a tax benefit on transport allowance or forgotten to give the tax benefit in Form 16 , you can claim tax exemption by following the below process:

• Check the CTC structure from the salary slip.
• Check whether the amount of transport allowance is part of the CTC.
• If the amount in the CTC structure is less than Rs 3,200 per month, the entire travel allowance would be tax-free.
• If the amount in the CTC structure is more than Rs 3,200 per month, the tax-free amount would only be Rs 3,200 per month.  

Related Articles

Income tax allowances and deductions Special allowance taxation Allowances and deductions available to a salaried

Frequently Asked Questions

A normal employee (other than a handicapped employee) cannot claim transport allowance for commuting between residence and place of work or employment.

The standard deduction is a flat deduction available from the taxable salary or pension income. The deduction amount is Rs. 40,000 for FY 2018-19, whereas it is increased to Rs.50,000 from FY 2019-20 and onwards.

You can furnish the proof or invoices of relocation expenses to your employer and claim tax-free reimbursement.

The tax exemption for medical reimbursement is no longer applicable. From the FY 2018-19, the fixed medical reimbursement and transport allowance stand replaced by a standard deduction.

No, if there is a company-run transportation service facility, they will not pay you a conveyance allowance whether you use the service or not. 

No, your employer can pay whatever amount they find appropriate. However, only specially abled employees can avail the exemption against such allowances.

An employee who is handicapped can get the exemption of transport allowance up to Rs. 3,200 per month.

Yes, a handicapped employee can get an exemption of up to 3,200 per month if he pays taxes in any of the regime.

No, transport allowance is fully taxable in the case of a normal employee if he pays taxes in any regime.

70% of such allowance up to a maximum of Rs.10,000 per month will be exempted if he has not received daily allowance. Suppose If he receives a daily allowance, then he would not be eligible for this exemption.

Quick Summary

Was this summary helpful.

Clear offers taxation & financial solutions to individuals, businesses, organizations & chartered accountants in India. Clear serves 1.5+ Million happy customers, 20000+ CAs & tax experts & 10000+ businesses across India.

Efiling Income Tax Returns(ITR) is made easy with Clear platform. Just upload your form 16, claim your deductions and get your acknowledgment number online. You can efile income tax return on your income from salary, house property, capital gains, business & profession and income from other sources. Further you can also file TDS returns, generate Form-16, use our Tax Calculator software, claim HRA, check refund status and generate rent receipts for Income Tax Filing.

CAs, experts and businesses can get GST ready with Clear GST software & certification course. Our GST Software helps CAs, tax experts & business to manage returns & invoices in an easy manner. Our Goods & Services Tax course includes tutorial videos, guides and expert assistance to help you in mastering Goods and Services Tax. Clear can also help you in getting your business registered for Goods & Services Tax Law.

Save taxes with Clear by investing in tax saving mutual funds (ELSS) online. Our experts suggest the best funds and you can get high returns by investing directly or through SIP. Download Black by ClearTax App to file returns from your mobile phone.

Cleartax is a product by Defmacro Software Pvt. Ltd.

Company Policy Terms of use

Data Center

SSL Certified Site

128-bit encryption

U.S. Department of State

Diplomacy in action.