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Transport allowance for individual salaried employees has been doubled to Rs 1,600 per month from the existing Rs 800 per month. The total yearly benefit will amount to Rs 19,200 as opposed to Rs 9,600 at present.
Industry watchers had expected the limit to be enhanced to anywhere between Rs 3,000 and Rs 4,000 per month. The hike in the limit is especially disappointing considering that the present exemption limit was arrived at more than a decade ago.
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“It's a beginning and a step in the right direction, although he (the finance minister) could have done a lot more,” said Homi Mistry, partner, Deloitte Haskins & Sells.
Transport allowance is granted to an employee to meet expenditure on commuting between place of residence and place of duty. The amount paid under this head is exempt from taxation.
At present, an exemption of Rs 1,600 per month is given only for blind and handicapped employees.