In every individual salary structure certain allowances is there which is given by the employer regularly in addition to salary for the purpose of meeting some particular requirements connected with the service rendered by the employee or as compensation for unusual condition of that service. Transport allowance is one of the allowance received by the employee which is exempt upto certain extent and this allowance is granted to most of the employees by their employers.

As per Income Tax Act, 1961 a sum upto Rs. 800/- per month of transport allowance shall be exempt if it is granted to an employee to meet his expenditure for the purpose of commuting between the place of his residence and the place of his duty.

But, when transport allowance is granted to an employee, who is blind or orthopaedic ally handicapped with disability of lower extremities to meet his expenditure for the purpose of commuting between the place of his residence and the place of his duty then a sum upto Rs. 1,600/- per month of transport allowance is exempt from tax.

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