Income Tax - Exemption Limit for Transport Allowance Increased to Rs. 1600

By Vijay Kumar

THE Fifth Pay Commission allowed a 'transport allowance' to the Central Government employees. The maximum amount of allowance was Rs. 800 per month. This was in 1997. Consequently the Income Tax Department by Sl. No. 10 in the Table to Rule 2BB(2) allowed a maximum of Rs. 800 as transport allowance granted to an employee as exemption from income tax. That is, all the central government employees enjoyed full exemption of the transport allowance given to them.

The Sixth Pay Commission enhanced the maximum limit of transport allowance to Rs. 3200 with D.A in 2006. That means as of now, the maximum transport allowance is Rs.6816. Even the minimum transport allowance for the lowest cadre employee in a city is Rs. 852.

But the income tax exemption limit of Rs. 800 fixed in 1997 was not increased for the last 18 years.

Now the CBDT has amended this table in the Rule 2BB(2) to enhance the exemption limit to Rs. 1600. This would mean a saving of Rs. 80 to Rs. 240 per month for each employee.

The exemption limit for a blind or orthopaedically handicapped employee was Rs.1600, now raised to Rs.3200.

CBDT Notification No. 39/2015, Dated: April 13, 2015