Yes, according to the Income Tax Act, you will be taxed for conveyance allowance received from your employers. However, if you opt for the new Income Tax regime, you can claim an exemption on conveyance allowance. The Central Board of Direct Taxes (CBDT) amended the income tax rules recently to allow for these changes. Under this provision, an employee can claim an exemption under various sub-categories such as allowances to cover travel costs on tour or transfers, ordinary daily charges incurred on account of absence from his normal place of duty, and conveyance allowance.

The new optional tax regime was introduced in the FY20-21 Budget this fiscal. According to this, income tax rates were to be reduced for taxpayers who opted for relinquishing the deductions and exemptions available in the old tax regime. This means giving up on deductions and exemptions which were available by opting for investment instruments such as insurance, PPF, ELSS, etc. The provision for tax relief on conveyance allowance will come into force from 1st April 2021. Thus, it will apply from the assessment year FY21-22 onwards.