Tag: Rule 280

Uniform Allowance: Tax Exemption, Limit and Rules

Posted on by CA Meet Dhrangadhariya

Last updated: 15 August 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • Uniform allowance is exempt up to the amount you actually spend on buying or maintaining uniforms for official duties.
  • The unspent part is taxable as salary.
  • It is available only in the old tax regime; the new regime does not exempt it.
  • From Tax Year 2026-27 it is in Schedule III of the Income-tax Act, 2025 and Rule 280(1)(g) of the Income-tax Rules, 2026.

A uniform allowance is paid by an employer to meet the cost of uniforms that employees must wear while working, as in the police, defence, hospitals, airlines and banks. The allowance is part of salary, but the part you spend on the uniform is exempt from tax if you are in the old tax regime.

Where is this in the law?

Up to FY 2025-26 it was section 10(14)(i) of the Income-tax Act, 1961 and Rule 2BB(1)(g). From Tax Year 2026-27 it is in Schedule III (Table Sl. No. 12) of the Income-tax Act, 2025, with Rule 280(1)(g) of the Income-tax Rules, 2026, which covers an allowance granted to meet the expenditure incurred on the purchase or maintenance of uniform worn during the performance of duties of an office or employment of profit.

How much is exempt?

The lower of:

  • the uniform allowance you receive, and
  • the amount you actually spend on the uniform.

Any unspent part is taxable as salary.

What counts as uniform expenditure?

  • Buying uniforms.
  • Tailoring or alteration.
  • Laundry and maintenance.
  • Accessories that are part of the uniform.

Example

Mr P gets a uniform allowance of ₹24,000 a year but spends only ₹18,000 on uniforms and laundry. In the old regime ₹18,000 is exempt and ₹6,000 is taxable. In the new regime the whole ₹24,000 is taxable.

Old regime or new regime?

Under section 202 of the Income-tax Act, 2025 the new regime does not exempt this allowance. Rule 280(3) keeps in the new regime only the allowances for travel on tour or transfer, daily charges, conveyance in duties, and the disabled employee’s transport allowance. Uniform allowance is not on that list, so you need the old regime.

How to claim

Give your employer proof of expense or the declaration the employer asks for, so the exemption is allowed in Form 16. If it was not, you can claim it in the salary schedule when you file your return, but keep the bills in case of a query.

Frequently asked questions

How much of uniform allowance is exempt?

The amount you actually spend on the purchase or maintenance of uniform for official duties, up to the allowance you receive. The balance is taxable.

Is uniform allowance exempt in the new tax regime?

No. It is exempt only in the old regime.

What expenses are covered?

Buying uniforms, tailoring and alteration, laundry and upkeep, and accessories that are part of the uniform.

Do I need bills?

Keep bills or a declaration as your employer asks. The exemption is based on actual expense.

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

Children Education Allowance, Hostel Allowance and Tuition Fee Tax Benefits

Posted on by CA Meet Dhrangadhariya

Last updated: 11 July 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • From 01/04/2026 children education allowance is exempt up to ₹3,000 a month per child and hostel allowance up to ₹9,000 a month per child, for up to two children, in the old tax regime only.
  • Up to FY 2025-26 the limits were only ₹100 and ₹300 a month per child.
  • Separately, tuition fees for up to two children can be claimed under section 80C (section 123 of the Income-tax Act, 2025), within the ₹1.5 lakh limit, in the old regime.
  • Neither benefit is available in the new tax regime.

Salaried parents can get two separate tax benefits for their children’s education: an exemption on the children education allowance and hostel allowance their employer pays, and a deduction for tuition fees under section 80C. Both need the old tax regime.

Children education and hostel allowance

Up to FY 2025-26 these were exempt under section 10(14)(ii) of the Income-tax Act, 1961 and Rule 2BB. From Tax Year 2026-27 they are in Schedule III (Table Sl. No. 13) of the Income-tax Act, 2025, with the amounts in Rule 280(2) of the Income-tax Rules, 2026.

Allowance Up to FY 2025-26 From 01/04/2026
Children education allowance, per child per month ₹100 ₹3,000
Hostel expenditure allowance, per child per month ₹300 ₹9,000
Number of children Two Two

So for two children, the annual exemption from 01/04/2026 is up to ₹72,000 for education allowance and up to ₹2,16,000 for hostel allowance. Both apply across India and need the allowance to be actually paid by the employer. The exemption is not more than the allowance received.

The new limits apply only to the old tax regime. Under section 202 of the Income-tax Act, 2025 and Rule 280(3), the new regime does not allow these exemptions.

Tuition fees under section 80C

  • Tuition fees paid to a university, college, school or other educational institution in India for the full-time education of up to two children qualify under section 80C, within the overall ₹1.5 lakh limit. From Tax Year 2026-27 this is section 123 of the Income-tax Act, 2025.
  • Development fees, donations, transport, uniform, stationery and similar charges do not qualify.
  • Part-time courses and fees paid for yourself, your spouse or other relatives do not qualify. Fees paid to an institution outside India do not qualify.
  • The fee must have been paid in the year.

Example

Ms R has two children, one in a day school and one in a hostel. Her employer pays children education allowance of ₹3,000 a month for each child, and a hostel allowance of ₹9,000 a month for one child. In FY 2026-27 she can exempt ₹72,000 education allowance and ₹1,08,000 hostel allowance in the old regime. If she also pays ₹40,000 as tuition fees, she can claim that under section 123 along with her other 80C investments.

How to claim

  • Give your employer the fee receipts and the declaration in Form 124 (earlier Form 12BB) so the exemption and deduction are allowed while calculating TDS.
  • If you could not, claim them when you file your return. Salaried parents claim the allowance in the salary schedule and the tuition fees in the deductions schedule.
  • Non-salaried parents can claim only the tuition fee deduction.

Frequently asked questions

What is the children education allowance exemption now?

From 01/04/2026, ₹3,000 a month per child, up to two children, in the old tax regime. Up to FY 2025-26 it was ₹100 a month per child.

What is the hostel allowance exemption?

From 01/04/2026, ₹9,000 a month per child, up to two children. Up to FY 2025-26 it was ₹300 a month per child.

Can I claim both the allowance and tuition fees under 80C?

Yes. They are separate benefits: the allowance is an exemption on salary, and the tuition fees are a section 80C deduction.

Does 80C cover school development fees or donations?

No. Only tuition fees for full time education in India, for up to two children.

Are these available in the new tax regime?

No. Both the allowances and the 80C deduction need the old regime.

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

Special Allowance in Salary: How It Is Taxed and Which Allowances Are Exempt

Posted on by CA Meet Dhrangadhariya

Last updated: 29 August 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • A “special allowance” shown in a salary slip is taxable as salary unless it is one of the allowances the law names as exempt.
  • Exempt allowances include travel on tour or transfer, daily charges, conveyance in duties, helper, research and uniform allowances, up to actual expenditure, and fixed-limit allowances such as children’s education (₹3,000 a month per child from 01/04/2026).
  • In the new tax regime only the travel, daily charge and conveyance allowances (and the disabled employee transport allowance) stay exempt; the rest need the old regime.
  • The list is in Schedule III of the Income-tax Act, 2025 and Rule 280 of the Income-tax Rules, 2026.

Many salary slips show a line called “special allowance”. It is usually a balancing amount that the employer adds to reach the agreed total pay. For tax, the name does not matter. The allowance is taxable as salary unless the law specifically names it as exempt.

Which allowances are exempt?

Until FY 2025-26 the exemptions were under section 10(14) of the Income-tax Act, 1961 and Rule 2BB. From Tax Year 2026-27 they are in Schedule III (Table Sl. Nos. 12 and 13) of the Income-tax Act, 2025, and Rule 280 of the Income-tax Rules, 2026.

Exempt up to the actual expenditure (Schedule III, Sl. No. 12)

Allowance Exempt up to
Travel on tour or transfer, and transfer, packing and transportation of personal effects Actual expense
Daily charges while away from the normal place of duty on tour or transfer Actual expense
Conveyance in the performance of duties (no free conveyance from the employer) Actual expense
Helper engaged for the performance of duties Actual expense
Academic, research and training pursuits in educational and research institutions Actual expense
Purchase or maintenance of uniform Actual expense

Exempt up to a fixed limit (Schedule III, Sl. No. 13), from 01/04/2026

Allowance Exempt amount
Children education allowance ₹3,000 a month per child, up to two children
Hostel expenditure allowance ₹9,000 a month per child, up to two children
Transport allowance for a blind, deaf and dumb or orthopaedically disabled employee ₹15,000 a month plus dearness allowance (metro cities) or ₹8,000 plus dearness allowance (other cities)
Transport business employee (no daily allowance) 70% of the allowance, up to ₹25,000 a month
Underground mine allowance 15% of basic pay
Special compensatory (remote locality), tough location allowances ₹1,500, ₹4,500 or ₹7,000 a month, depending on the place
Compensatory field area allowance ₹13,500 a month in notified areas
Compensatory modified field area allowance ₹8,000 a month in notified areas
Island duty allowance (Andaman and Nicobar, Lakshadweep) 10%, 16% or 20% of basic pay, depending on the area
Armed forces allowances: counter-insurgency, highly active field area, high altitude, Siachen ₹22,000, ₹22,000, ₹4,500 to ₹30,000 and ₹42,500 a month

Up to FY 2025-26 the old limits applied, for example ₹100 a month per child for education, ₹300 for hostel, ₹3,200 for the disabled employee’s transport allowance and 70% up to ₹10,000 for transport business employees.

What stays exempt in the new tax regime?

Under section 202 of the Income-tax Act, 2025 the new regime does not give most exemptions under Schedule III Sl. Nos. 12 and 13, except those prescribed. Rule 280(3) prescribes the allowances for travel on tour or transfer, packing and transport of effects, daily charges, conveyance in duties, and the disabled employee’s transport allowance. Helper, research, uniform, children education, hostel and the other fixed-limit allowances need the old regime.

When is a special allowance taxable?

  • A plain “special allowance”, a fixed allowance, a city compensatory allowance, dearness allowance and an allowance that you can spend as you wish are all taxable.
  • An exempt allowance becomes taxable if it does not meet the conditions of the rule, for example conveyance allowance when the employer gives a free car.
  • HRA has its own rules under the HRA exemption.

Does restructuring your salary help?

Under the old regime, if your employer pays genuine exempt allowances (for example uniform or children education), the exempt part reduces taxable salary. Moving amounts from taxable special allowance to exempt allowances you do not actually qualify for gives no benefit and can create a tax demand. Work out your tax under both regimes before you decide.

Examples

  1. Ms V has a “special allowance” of ₹10,000 a month in her slip. It is not named in the rule, so it is fully taxable.
  2. Mr C is a public sector doctor posted at a tribal area medical camp and gets a notified special compensatory allowance. It is exempt up to the limit for that place, in the old regime.
  3. Ms S gets children education allowance for two children. From 01/04/2026, up to ₹3,000 a month per child (₹72,000 a year for two) is exempt in the old regime, and ₹9,000 a month per child (₹2,16,000 a year for two) for hostel allowance.

Frequently asked questions

Is special allowance taxable?

Yes, a general special allowance shown in the salary slip is taxable as salary. It is exempt only if it matches one of the allowances listed in the rules and you meet the conditions.

Can I save tax by increasing allowances in my salary?

Only if the allowances are genuinely exempt and you spend them (or fall within a fixed limit) and you are in the old regime. A plain special allowance does not save tax.

Which allowances stay exempt in the new regime?

Allowances for travel on tour or transfer, daily charges while travelling, conveyance in the performance of duties, and the transport allowance of a disabled employee.

Where is the list of exempt allowances?

In Schedule III (Sl. Nos. 12 and 13) of the Income-tax Act, 2025 and Rule 280 of the Income-tax Rules, 2026.

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

Conveyance Allowance: Exemption Limit, Calculation and Eligibility

Posted on by CA Meet Dhrangadhariya

Last updated: 06 August 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • Conveyance allowance is exempt to the extent of the amount you actually spend on travel in the performance of your official duties, in both the old and the new tax regime.
  • It applies only if your employer does not give you a free conveyance, and the part not spent is taxable.
  • The old ₹1,600 a month fixed exemption is not conveyance allowance: it was a transport allowance for commuting and ended in FY 2018-19.
  • From Tax Year 2026-27 the rule is in Schedule III of the Income-tax Act, 2025 and Rule 280(1)(d) of the Income-tax Rules, 2026.

Conveyance allowance is paid to an employee to meet the cost of travel done in the course of official work, such as visiting clients or sites. It is exempt from tax up to what you actually spend on such travel. There is no fixed rupee limit.

Where is this in the law?

Up to FY 2025-26 it was section 10(14)(i) of the Income-tax Act, 1961 and Rule 2BB(1)(b). From Tax Year 2026-27 it is in Schedule III of the Income-tax Act, 2025 (Table Sl. No. 12), with Rule 280(1)(d) of the Income-tax Rules, 2026 describing it as an allowance granted to meet the expenditure on conveyance in performance of duties of an office or employment of profit, where no free conveyance is provided by the employer.

How much is exempt?

The lower of:

  • the allowance you receive, and
  • the amount you actually spend on conveyance for official duties.

The unspent part is taxable as salary. Keep records of your official journeys, such as a log, fuel bills, tickets or cab receipts, as your employer may ask for them.

The ₹1,600 myth

Many articles say conveyance allowance is exempt up to ₹1,600 a month (₹19,200 a year). That figure belonged to the transport allowance for commuting between home and office, which was withdrawn from FY 2018-19 when the standard deduction was introduced. It is not a conveyance allowance limit. A fixed monthly “conveyance” amount that you use only to commute to work is therefore taxable.

Conveyance allowance vs transport allowance

Basis Conveyance allowance Transport allowance
Purpose Travel while doing the job Travel between home and office
Exemption Actual expense, up to the allowance Only for disabled employees and transport business employees
Regimes Both old and new Disability: both. Transport business: old only

Who is eligible?

Any employee who has to travel for official work, and whose employer does not provide a free conveyance. If the employer gives a company car or free transport, no exemption is allowed.

Reporting

Your employer applies the exemption in Form 16, based on the declaration and proof you give. In your return, show the exempt and taxable parts in the salary schedule.

Old regime or new regime?

Conveyance allowance (for travel in the performance of duties) is one of the few allowances that continue to be exempt in the new regime. Under section 202 of the Income-tax Act, 2025 and Rule 280(3), the new regime keeps the exemption for allowances for travel on tour or transfer, daily charges, conveyance in duties and, for a disabled employee, the transport allowance.

Frequently asked questions

What is the exemption limit for conveyance allowance?

There is no fixed limit. The exemption is the actual amount you spend on conveyance in performing your duties, up to the allowance you receive.

Is conveyance allowance taxable?

The part you do not spend on official travel is taxable as salary. A fixed allowance you use for commuting is taxable.

Is it available in the new tax regime?

Yes. It is one of the allowances that remain exempt in the new tax regime.

Is conveyance allowance the same as transport allowance?

No. Conveyance allowance is for travel in performing duties. Transport allowance is for travel between home and office.

Can I claim it if my employer gives a company car?

No. It applies only where no free conveyance is provided by the employer.

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

Transport Allowance: Tax Exemption, Limits for Tax Year 2026-27 and Rules

Posted on by CA Meet Dhrangadhariya

Last updated: 29 July 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • A transport allowance for travel between home and office is fully taxable for most employees. The old ₹1,600 a month exemption ended with the standard deduction in FY 2018-19.
  • Employees who are blind, deaf and dumb, or orthopaedically disabled get an exemption: ₹3,200 a month up to FY 2025-26, and from 01/04/2026 ₹15,000 a month plus dearness allowance in metro cities or ₹8,000 plus dearness allowance elsewhere.
  • Employees of a transport business can exempt 70% of the allowance, up to ₹10,000 a month until FY 2025-26 and ₹25,000 a month from 01/04/2026, in the old regime.
  • The disability transport exemption works in both tax regimes.

A transport allowance is an amount an employer pays so an employee can travel between home and the place of work. For most employees it is fully taxable. A special exemption applies to employees with certain disabilities, and a separate one to employees of a transport business.

Up to FY 2025-26 the exemption was under section 10(14) of the Income-tax Act, 1961 and Rule 2BB. From Tax Year 2026-27 it is in Schedule III of the Income-tax Act, 2025, with the amounts in Rule 280 of the Income-tax Rules, 2026.

Why is it taxable for most employees?

Until FY 2017-18 every employee could exempt ₹1,600 a month of transport allowance. From FY 2018-19 that exemption was withdrawn and replaced by the standard deduction on salary, which now stands at ₹50,000 in the old regime and ₹75,000 in the new regime. So an ordinary employee pays tax on the whole allowance and gets the standard deduction instead.

Exemption for employees with disability

The exemption is for an employee who is blind, or deaf and dumb, or orthopaedically handicapped with disability of the lower extremities (from 01/04/2026, the lower or upper extremities), for travel between home and the place of duty.

Period Exempt amount per month
Up to FY 2025-26 ₹3,200
From 01/04/2026, metro cities ₹15,000 plus dearness allowance on it
From 01/04/2026, other cities ₹8,000 plus dearness allowance on it

This is available in both the old regime and the new regime. The part above the limit is taxable.

Transport business employees

An employee of a transport system who gets an allowance to meet personal expenses while on duty during the journey, and who does not get a daily allowance, can exempt 70% of the allowance, up to ₹10,000 a month until FY 2025-26 and up to ₹25,000 a month from 01/04/2026. This is allowed in the old regime only.

Transport allowance and conveyance allowance

Basis Transport allowance Conveyance allowance
For Travel between home and office Travel in the performance of duties, with no free conveyance from the employer
Exemption Only for disability or transport business, as above Actual expense incurred
Regimes Disability: both. Transport business: old only Both

Example

Mr D is an orthopaedically handicapped employee in Mumbai and gets ₹20,000 a month as transport allowance in FY 2026-27, with no dearness allowance on it. The exemption is the lower of ₹20,000 and ₹15,000 (plus DA on it, nil here), so ₹15,000 a month, ₹1,80,000 a year, is exempt. The balance of ₹5,000 a month is taxable.

Another employee with no disability and the same allowance pays tax on the whole ₹2,40,000 a year.

How to claim

Your employer applies the exemption when calculating TDS and shows it in Form 16. Give the employer a disability certificate. If it was missed, you can still claim the exemption when you file your return, in the exempt allowances part of the salary schedule.

Central Government employees

Transport allowance for Central Government employees under the 7th Pay Commission depends on pay level and city class (for example ₹7,200 plus dearness allowance for pay level 9 and above in the highest cities). It is taxable unless the employee has a disability and qualifies for the exemption above.

Frequently asked questions

Is transport allowance taxable?

Yes, for most employees it is fully taxable. The exemption for commuting allowance was withdrawn from FY 2018-19 when the standard deduction was introduced.

Who gets a transport allowance exemption?

An employee who is blind, deaf and dumb, or orthopaedically handicapped with disability of the lower or upper extremities, for travel between home and work.

How much is exempt for a disabled employee from 01/04/2026?

₹15,000 a month plus dearness allowance in metro cities, and ₹8,000 a month plus dearness allowance in other cities (up to FY 2025-26 the limit was ₹3,200 a month).

Is it available in the new tax regime?

Yes, the transport allowance for disabled employees is allowed in both regimes. The transport business exemption is old regime only.

Is transport allowance the same as conveyance allowance?

No. Transport allowance is for travel from home to office. Conveyance allowance is for travel in the performance of duties and is exempt to the extent of the actual expense.

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.