Transport Allowance 2026: Rates, Rules & Exemption Guide India

Every month, lakhs of employees get a line item on their payslip titled, “travel allowance”. Most employees know it exists as a part of their salary but only a few know how it’s calculated, why this amount changes with a DA change, or when they might stop receiving it altogether.

Transport allowance is a salary component that helps employees cover the cost of commuting between their home and workplace. For Central Government employees, it follows the 7th Pay Commission framework and is linked to Dearness Allowance (DA), while private sector employees typically receive it as a fixed component in their salary structure.

Whether you’re an HR professional managing payroll, a central government employee checking your entitlement, or a salaried employee trying to understand the tax implications, knowing how transport allowance works is essential.

This guide explains transport allowance in 2026, including current 7th CPC rates, DA calculations, tax exemption rules, eligibility criteria, disability-related benefits, non-payment conditions, and the latest developments around the 8th Pay Commission.

What HR and Payroll Teams Should Know About Transport Allowance in 2026 Transport allowance follows 7th CPC rates in 2026. No revision until 8th CPC, expected post-mid-2027.DA is 60% from January 1, 2026. Your total TA = Base Rate x 1.60.Transport allowance is fully taxable for regular employees under both regimes. The Finance Act 2018 removed the old Rs. 1,600/month exemption. If your payroll system still treats it as tax-free, fix it now.Disabled employees retain the Rs. 3,200/month exemption under both the old and new tax regimes.Budget 2026 changed nothing here. Rates, exemptions, and standard deductions are unchanged for AY 2026-27.The full calendar month rule is where most payroll teams slip. One month of full leave, suspension, or deputation abroad stops TA entirely. Partial-month absence does not.The 8th Pay Commission is in consultation. Base TA rates are projected to rise 25-35%. Official numbers are expected mid-2027.

Understanding Transport Allowance

Transport allowance is the amount paid to an employee to cover commuting expenses between their place of residence and their place of duty.

Under Section 10(14) of the Income Tax Act, 1961, read with Rule 2BB, it is defined as an allowance granted to meet commuting expenditure or, for transport sector employees, to meet personal expenditure.

There are three things that sets it apart from most of the other salary components:

• It is flat, not reimbursement-based. You do not submit petrol bills or log your kilometers. Your TA is determined by your Pay Level and your office’s city classification, not by what you actually spend on your commute.
• It moves with DA. Every time Dearness Allowance goes up, your transport allowance goes up with it. Unlike HRA, which only steps up when DA crosses the 25% and 50% thresholds, TA adjusts with every single revision.
• It requires zero paperwork. It gets credited automatically with your monthly salary. No bills, no vouchers, no approval process. For your payroll team, this also means no documentation to collect or verify, unlike conveyance allowance.

Transport Allowance vs Conveyance Allowance

These two allowances get used interchangeably in most of the salary conversations, but they are treated very differently in payroll and tax treatment.

Transport allowance covers the daily commute from office to home, while conveyance allowance covers travel expenses incurred while performing official duties.

Here are the key differences between both the terms:

Feature	Transport Allowance	Conveyance Allowance
Purpose	Home-to-office commute	Official local travel for duty
Basis	Fixed flat rate per pay level	Reimbursement of actual expense
Evidence needed	No bills required	Logbooks/vehicle proof
Taxation	Fully taxable	Exempt to extent of actual expenditure
DA linkage	Yes	No
Applicable to	Almost all regular employees	Only those who travel for official work

A payroll implication worth flagging is that conveyance allowance needs documentation before you process it. Transport allowance does not. But because TA is fully taxable for most employees, you must include it in taxable salary when computing TDS.

If you are using a payroll software like Keka, both these allowances can be configured separately in the salary structure with the right tax treatment mapped to each of the components automatically without manual intervention.

7th Pay Commission Transport Allowance Rules

The current transport allowance structure came into force through Ministry of Finance Office Memorandum No. 21/5/2017-E.II(B), dated 7 July 2017. It applies to all civilian Central Government employees, including those paid from Defence Service Estimates, effective from 1st July, 2017.

Knowing the 7th CPC rules helps you understand why the rate table looks the way it does, and what to expect when the 8th Pay Commission revises it.

How the 7th CPC Changed Transport Allowance?

The 6th CPC used Grade Pay as the classification anchor for transport allowance. The 7th CPC replaced that with a Pay Matrix, and TA moved with it. Allowances are now mapped to Pay Levels directly, which removed a lot of the older classification ambiguity.

The city eligibility list was also revised. The 7th CPC updated which cities qualify for higher transport allowance using Census 2011 data, effective 1 April 2015. The result is the 19-city TPTA list that is still in force today.

DA linkage was formalized as a principle, not just a practice. Fuel and commuting costs track with inflation. Tying TA to DA means the allowance self-adjusts every six months without needing a fresh government order each time.

Finance Act 2018: The Tax Change That Still Creates Payroll Errors

This is the change that still creates payroll errors in 2026, especially in private sector companies.

From FY 2018-19, the government removed the separate Rs. 1,600/month transport allowance exemption for regular employees and merged it with the medical allowance exemption into a single standard deduction. The Rs. 1,600/month exemption no longer exists.

	FY 2017-18	FY 2018-19 onwards
Transport allowance exemption	₹19,200/year	Nil (regular employees)
Medical allowance exemption	₹15,000/year	Nil
Standard deduction	Nil	₹50,000 (old regime)/₹75,000 (new regime)

The problem HR teams still encounter in 2026:

CTC structures built before 2018 that still show transport allowance as “tax-free up to Rs. 1,600/month.” Many organizations migrated those structures to new payroll systems without updating the taxability flag. If your system still treats regular employee TA as partially exempt, it is creating TDS mismatches.

Modern payroll systems like Keka’s tax engine flags these legacy configurations and applies the correct taxability treatment based on current rules, which is worth checking if your organization migrated salary structures from an older system.

Official Government Orders Governing Transport Allowance

OM Number	Subject	Date
21/5/2017-E.II(B)	Implementation of 7th CPC — Transport Allowance rates	07/07/2017
21/1/2018-E.II(B)	Transport Allowance at double rates for Persons with Disabilities (latest compendium)	29/07/2025

The PwD compendium was last updated in July 2025. If your payroll team is working off an older version, the DoE order index at doe.gov.in has the current one.

Now that the framework is in place, the next step is understanding what the actual numbers look like by pay level.

Transport Allowance Rates for Central Government Employees (2026)

All the rates below use 7th CPC base amounts plus DA at 60%, which is the current rate effective 1 January 2026.

The formula you will use throughout:

Total TA = Base Rate x 1.60.

What is the TA Rate for Pay Level 1 and 2 (MTS, Group C)

At Level 1 and 2, the rate splits based on whether the employee’s basic pay is below or at/above Rs. 24,200.

For basic pay below Rs. 24,200, the base rate is Rs. 1,350 in TPTA cities and Rs. 900 in other places. At 60% DA, that becomes Rs. 2,160/month in TPTA cities and Rs. 1,440/month elsewhere.

For basic pay at Rs. 24,200 and above, the base rate is Rs. 3,600 in TPTA cities and Rs. 1,800 in other places. That is the same base as the Level 3-8 bracket.

What is the TA rate for Pay Level 3 to 8 (Inspectors, Assistants)?

Base rate: Rs. 3,600 in TPTA cities, Rs. 1,800 in other places.

A Level 7 Inspector posted in Kolkata gets Rs. 3,600 base plus Rs. 2,160 DA = Rs. 5,760/month.

The same inspector transferred to Ranchi, a non-TPTA city, would get Rs. 1,800 base plus Rs. 1,080 DA = Rs. 2,880/month.

That is a Rs. 2,880/month difference from city classification alone.

What is the TA rate for Pay Level 9 and Above (Officers)?

Base rate: ₹7,200 in TPTA cities, ₹3,600 in other places.

A Level 9+ officer in Delhi gets ₹7,200 plus ₹4,320 DA = ₹11,520/month.

Officers drawing pay in Level 14 and above, who are entitled to use an official car, may opt to draw a transport allowance at ₹15,750 per month.

This applies to officers who opt for transport allowance in lieu of official car entitlement.

Transport Allowance 2026 (Complete Rate Table)

DA is 60% from January 1, 2026. At Level 3 and above, a TPTA city posting gives you exactly double the base of a non-TPTA posting.

Pay Level	TPTA Base	TPTA Total at 60% DA	Other Base	Other Total at 60% DA
14 and above	₹15,750 (fixed)	₹15,750	₹15,750 (fixed)	₹15,750
9 and above	₹7,200	₹11,520	₹3,600	₹5,760
3 to 8	₹3,600	₹5,760	₹1,800	₹2,880
1 to 2 (pay ≥ ₹24,200)	₹3,600	₹5,760	₹1,800	₹2,880
1 to 2 (pay < ₹24,200)	₹1,350	₹2,160	₹900	₹1,440

The rate table gives you a basic approximation of how much. In the next section, lets explore whether you qualify for a higher column.

TPTA Cities List 2026

Your transport allowance rate depends on where your office is located, not where you live. That is a distinction that matters for employees who live in one city and are posted in another.

The 19 TPTA cities are classified as Urban Agglomerations (UA) under Census 2011 data, effective 1 April 2015. UA classification means the benefit extends beyond just the core city to include contiguous suburban areas in the Census-defined urban spread.

If your office is in Navi Mumbai, you fall within the Greater Mumbai UA and qualify for the higher rate.

Complete list of 19 Higher TPTA cities (Official, w.e.f 01.04.2015)

State	TPTA – Eligible City
Bihar	Patna
Delhi	Delhi
Guajarat	Ahmadabad, Surat
Karnataka	Bengaluru
Kerala	Kochi, Kozhikhode
Madhya Pradesh	Indore
Maharashtra	Greater Mumbai, Nagpur, Pune
Rajasthan	Jaipur
Tamil Nadu	Chennai, Coimbatore
Uttar Pradesh	Ghaziabad, Kanpur, Lucknow
West Bengal	Kolkata
Andhra Pradesh/Telangana	Hyderabad

Why City Classification Matters for TA?

City classification drives two salary components at the same time: transport allowance and HRA.

X-category cities attract 24% of basic pay as HRA, Y-category cities 16%, Z-category cities 8%. The TPTA city list broadly overlaps with the X and Y city tiers, which means an employee transfer that changes the HRA city tier almost always changes the TA classification too.

For HR teams managing inter-city transfers, both components need to update together. In a smart payroll solution provider like Keka, a location change on the employee profile triggers both HRA city percentage and TA city classification updates at the same time.

Knowing which city your employee is in tells you which base rate to use. The next question is how to apply DA on top of that.

Calculating DA on Transport Allowance

Transport allowance is one of the simplest DA calculations you will do, but it is also the one that creates the most arrear headaches when DA revisions are applied late.

Unlike HRA, which steps up only when DA crosses 25% and 50%, transport allowance increases with every single DA revision. Every time the Union Cabinet announces a DA hike, your TA goes up in the same month it takes effect.

What is the DA formula for transport allowance?

The working formula is as follows:

Total TA = Base TA Rate + (Base TA Rate x Current DA %)

(or)

Total TA = Base TA Rate x (1 + DA%/100)

Step-by-step calculation examples (DA = 60%, January, 2026)

Criteria	Inspector	MTS	Director	Senior Officer
Pay level	7	2	13	9+
City Type	Kolkata	Patna	Ranchi	Delhi
Base TA	₹3600	₹1350	₹3600	₹7200
DA (60%)	₹2160	₹810	₹2160	₹4320
Total TA (Jan 2026)	₹5760/month	₹2160/month	₹5760/month	₹11520/month

Notice the Director’s number. A Level 13 officer in Ranchi gets exactly the same total as Level 7 Inspector in Kolkata. City classification, not pay level alone, determines where you end up.

Those calculation examples hold as long as DA stays at 60%. The moment DA changes, every number in that table shifts. That is exactly the situation that generates arrears, which is covered later on.

Transport Allowance for Persons with Disabilities

This section covers two separate rules that apply to disabled employees. They are often confused because both involve the ₹3,200 figure, but they operate completely independently.

The first is the government-side payment rule: eligible disabled Central Government employees receive TA at double the normal rate. The second is the income tax exemption: eligible disabled employees can claim ₹3,200/month as tax-exempt under Section 10(14).

Who qualifies for special TA rates?

The Ministry of Finance order covers four categories:

• Visually impaired (total absence of sight or visual acuity not exceeding 6/60)
• Deaf and dumb/hearing impaired
• Orthopedically handicapped with disability of the lower extremities
• Spinal deformity

What is the enhanced TA rate for disabled Central Government employees?

Eligible disabled employees receive transport allowance at double the normal rate, subject to a minimum floor of Rs. 2,250 plus applicable DA.

Here is how the floor works in practice:

A Level 2 employee in a non-metro city has a base TA of Rs. 900. Double that is Rs. 1,800, which falls below the Rs. 2,250 floor.

So the employee receives Rs. 2,250 plus DA. At 60% DA, that is Rs. 2,250 plus Rs. 1,350 = Rs. 3,600/month.

Is the ₹3,200/month tax-exemption available under the new tax regime?

Yes. Under Rule 2BB(2), Serial No. 11, eligible disabled employees can claim Rs. 3,200/month or Rs. 38,400/year as tax-exempt under Section 10(14). This exemption is confirmed as available under both the old and new tax regimes for AY 2026-27, as amended by Finance Act 2026.

Most payroll guides and even some tax professionals state that the Rs. 3,200/month exemption is not available under the new regime. That is incorrect. If your payroll processing has been denying this exemption to disabled employees on the new regime, that needs to be corrected.

How do disabled employees claim the exemption in their ITR?

If your employer applied the exemption during TDS computation, it will appear in Form 16 Part B. You enter that figure in the “Income from Salary” column of the ITR.

If your employer did not apply it, here is what to do:

• Check your CTC breakdown in the salary slip to confirm how much TA was paid.
• If TA is below Rs. 3,200/month, the entire amount is tax-free for eligible employees.
• If TA exceeds Rs. 3,200/month, only Rs. 3,200/month is exempt and the balance is taxable.
• Report the exempt portion under “Exempt Income” when filing your return.
• Keep your disability certificate or medical certificate as documentation.

Transport Allowance Tax Rules (Old vs New Regime)

For regular employees, transport allowance is fully taxable under both regimes.

The Finance Act 2018 removed the separate Rs. 1,600/month exemption and replaced it with a standard deduction. That is still the position in AY 2026-27 and nothing in Budget 2026 changed it.

What is the tax treatment of TA under the old tax regime?

Fully taxable for regular employees. The standard deduction available is Rs. 50,000 or the salary amount, whichever is lower. There is no separate transport allowance exemption line for AY 2026-27.

What is the tax treatment of TA under the new tax regime?

Also fully taxable for regular employees. The standard deduction under Section 115BAC(1A)(ii) is Rs. 75,000 for salaried individuals and pensioners. That is Rs. 25,000 more than the old regime, with the same TA tax treatment.

Which regime is better for transport allowance?

Scenario	Old Regime	New Regime	Verdict
Regular salaried employee	TA fully taxable; standard deduction ₹50,000	TA fully taxable; standard deduction ₹75,000	New regime
Disabled employee	TA exempt up to ₹3,200/month + standard deduction ₹50,000	TA exempt up to ₹3,200/month + standard deduction ₹75,000	New regime
Central Government employee	Govt TA rate + DA; separately taxable for IT purposes	Same tax treatment for TA; overall tax depends on salary mix	Depends

The transport allowance treatment is identical across both regimes. For most employees, the new regime advantage is entirely through the standard deduction and not through any specific TA rule.

Transport Allowance for Private Sector Employees

Private sector employees receive transport allowance as a CTC component. Since FY 2018-19, it is fully taxable for regular employees. The standard deduction is the main tax relief, not any transport allowance exemption.

How is transport allowance treated in a private sector CTC?

Your TA sits in the CTC as a fixed monthly amount. It goes into taxable salary. Your employer computes TDS on it.

The legacy error that keeps showing up: CTC structures from before 2018 that still flag transport allowance as “tax-free: Rs. 1,600/month.”

Many organizations built their compensation structures before the Finance Act 2018 change and never updated the taxability flag when they moved to a new payroll system.

If your organization’s CTC structure still has this error, it is generating incorrect TDS every single month.

What is the transport allowance exemption for private sector disabled employees?

The ₹3,200/month exemption applies in the private sector too.

• If TA in the CTC is below ₹3,200/month, the full amount is tax-free for eligible employees.
• If TA in the CTC is above ₹3,200/month, only ₹3,200/month is exempt and the rest is taxable.

Keka’s salary structure module lets you configure the taxability of each CTC component individually. You can flag TA as fully taxable for regular employees, exempt up to Rs. 3,200/month for disabled employees, and let the system apply the right treatment in TDS computation automatically.

How to Claim Transport Allowance Exemption in ITR?

For most regular salaried employees, there is no separate TA exemption to claim in the ITR. Your standard deduction comes through automatically from Form 16.

The steps below are for disabled employees claiming the Section 10(14) exemption.

Step 1: Check your Form 16 Part B

Your employer typically applies the TA exemption during TDS. If they did, the exempt amount appears in Form 16 Part B. Enter that figure under “Income from Salary” in your ITR. No further calculation is needed on your end.

Step 2: Calculate your exempt amount

Maximum exemption for AY 2026-27 under Section 10(14): Rs. 3,200/month for eligible disabled employees.

• TA in CTC below Rs. 3,200/month: Full amount is exempt
• TA in CTC above Rs. 3,200/month: Rs. 3,200/month is exempt, balance is taxable

Step 3: Report in ITR-1/ITR-2 Schedule S

The exempt portion goes under “Exempt Income” in ITR-1 or ITR-2. Make sure this matches Form 16. A mismatch between the two can trigger a notice even when the underlying exemption is correct.

Step 4: Documentation for disabled employees

A valid disability certificate or medical certificate supports the claim. If your employer did not apply the exemption during TDS and you are claiming it yourself in the return, you need this documentation ready.

Situations Where Transport Allowance Is Not Payable

Most articles about transport allowance focus entirely on rates. The non-payment rules are where most payroll teams get caught.

The central rule is simple: transport allowance is not admissible for any calendar month that is completely covered by a non-duty situation. Partially covered months work differently.

What is the full calendar month rule for transport allowance?

Under the Ministry of Finance order, TA is not payable when any of the following cover a complete calendar month:

• Leave of any kind
• Tour away from headquarters or place of posting
• Suspension
• Deputation abroad
• Training at an institute where transport, TA, or DA is provided

The word “full” is doing a lot of work in that rule. Partial-month absence does not forfeit the allowance. If even one working day falls within the month outside the non-duty situation, TA is payable for the full month.

Two examples that clarify where the line is:

• Example 1: Leave from 1 March to 31 March. The entire calendar month is covered. TA = ₹0 for March.
• Example 2: Leave from 2 March to 30 April. March has a working day on the 1st, so TA is payable for March. April is fully covered, so TA = ₹0 for April.

What happens to TA during suspension?

If an employee under suspension is not attending office, TA is not admissible for full calendar months of suspension, even if that period is later regularized as duty. For partial suspension months, TA is reduced proportionately.

The payroll mistake that creates recovery headaches is continuing to pay TA during a suspension period because the suspension status was not flagged in the payroll system at the start.

By the time it is caught, there are months of excess payment to reverse and recover. Catching it at the beginning is significantly less painful than fixing it at the end.

What are the TA rules during training and deputation?

• Deputation abroad: No TA is admissible for the period of deputation.
• Domestic training treated as duty: TA may be paid only if no transport facility, Travelling Allowance, or Daily Allowance is provided for attending the institute. If the training covers a complete calendar month, TA is not admissible regardless.
• Training abroad: No TA when training period covers a whole calendar month

What happens to TA during study leave, child care leave, or vacation spells?

Study leave and child care leave follow the same full calendar month rule. If either covers an entire month, TA stops for that month.

Vacation staff can receive TA only when no free transport is provided. When the vacation spell, including all leave, covers the complete calendar month, TA is not payable.

Calculating Transport Allowance Arrears

When DA is revised with a retrospective effective date, which is the standard pattern with Central Government DA announcements, the transport allowance for the gap period needs to be recalculated. The difference between what was already paid and what is now owed gets settled as a lump-sum arrear.

How does a DA revision create TA arrears?

The Union Cabinet approved the current 60% DA effective 1 January 2026, revised from 58%. When this was announced and processed, employees were owed the 2% difference on their TA for the months between the effective date and the processing date. That is the arrear.

DA revision history for reference:

Jul 2024 = 53%, Jan 2025 = 55%, Jul 2025 = 58%, Jan 2026 = 60%.

What is the Arrears Calculation Formula?

TA Arrear per month = Base TA x (New DA% minus Old DA%) / 100\

Total Arrear = TA Arrear per month x Number of arrear months

Here is a calculation of the three month arrear, based on the DA revision on January 1, 2026:

Pay Level	City	Base TA	Monthly Arrear (2%)	3-Month Total
Level 9+	TPTA	₹7,200	₹144	₹432
Level 3-8	TPTA	₹3,600	₹72	₹216
Level 1-2	TPTA	₹1,350	₹27	₹81

In smart payroll software like Keka, DA revision updates can be applied with an effective date and the system runs arrear computation across all employees automatically, accounting for different pay levels and city classifications. That is significantly less error-prone than running the calculation manually for each employee.

State Government Transport Allowance Rules

State government employees are not covered by the Central Government OM. Each state issues its own Finance Department orders. Rates, city classifications, and revision timing vary across states.

If you are a Central Government employee on deputation to a state government, your transport allowance is governed by that state’s rules, not the Central TPTA framework.

What are the Karnataka State Government TA rates?

Karnataka’s Finance Department issued FD 52 SRP 2024 dated 27 March 2025, which revised conveyance allowance rates for differently-abled state employees.

For TA rates more broadly, the Karnataka Finance Department portal is the authoritative source. Do not assume Central Government TPTA rates apply.

What about Maharashtra, Tamil Nadu, and Uttar Pradesh?

Maharashtra, Tamil Nadu, and Uttar Pradesh each have their own finance portals with separate allowance notifications. The rates may approximate Central Government TPTA levels in some brackets but differ in city classification and revision timing.

Payroll note for multi-state HR compliance: The TPTA rate table in this guide applies only to Central Government civilian employees. State government employees and deputationists governed by state rules use that state’s Finance Department orders.

Transport Allowance for Defence Personnel

Defence personnel are explicitly excluded from the civilian OM. The Ministry of Finance order itself states that separate orders will be issued by the Ministry of Defence and Ministry of Railways for their respective personnel.

What TA rates apply to Defence Personnel?

Defence TA is governed by Ministry of Defence orders and the Defence Pay Matrix. The rates, city classifications, field area provisions, and operational allowances are structured differently from the civilian framework.

One reference point that sits at the intersection of both systems: Level 14+ officers who opt for TA in lieu of official car entitlement receive a fixed Rs. 15,750/month, with no separate DA component. That is the same fixed amount as the civilian Level 14+ bracket.

For rank-specific entitlements and field area rules, the relevant MoD orders are the authoritative source.

8th Pay Commission: What Could Change for Transport Allowance

The 8th Pay Commission was formally constituted on 3 November 2025 and is currently in the consultation phase. The NC-JCM submission deadline was extended to 15 June 2026. The final report is expected around mid-2027.

If implementation follows the pattern of previous commissions, employees may receive 18-24 months of arrears when rollout happens. For payroll teams, that is worth planning for now.

What is the expected timeline for the 8th Pay Commission?

Milestone	Status/Expected Date
Commission constituted	3rd November 2025
Consultation phase	Currently underway; NC-JCM deadline 15th June 2026
Final report	Mid-2027 (approx. 18 months from setup)
Implementation	Likely from 1 January 2026 (retrospective)
Arrear window	18-24 months if rollout is late 2027

What TA rates are expected under the 8th CPC?

Transport allowance will be rebuilt on the revised basic pay, the same way DA, HRA, and pension will be. A higher pay matrix means a higher TA base automatically.

On TA specifically, employee unions expect base rates to rise 25-35%, given that fuel prices have nearly doubled in parts of India since the 7th CPC in 2016.

There is also a push to expand the TPTA city list to include Visakhapatnam, Chandigarh, and Mysore, cities that have urbanized significantly since the 2011 Census.

Consultation-stage fitment factor projections:

Fitment Factor Scenario	Estimate
Aggressive (NC-JCM recommendation)	~3.83
Moderate (analyst consensus)	2.00 to 2.57
Conservative (lower bound)	1.83 to 2.00

None of these are official figures. The commission has not finalized the pay matrix, TA rates, HRA structure, or pension formula. Treat all projections as directional until the final report lands.

Budget 2026 and Its Impact on Transport Allowance

No. Union Budget 2026-27 made no changes to transport allowance rates, exemption limits, or standard deduction amounts.

The main direct-tax development in Budget 2026-27 was the New Income Tax Act, 2025 coming into effect from April 2026, along with simplified rules and forms. For transport allowance specifically, the existing framework carries forward unchanged.

What were the key tax announcements in Budget 2026-27?

The New Income Tax Act, 2025 took effect from April 2026. That is the headline development on the direct-tax side.

Standard deduction remains Rs. 75,000 under the new regime and Rs. 50,000 under the old regime for AY 2026-27. There was pre-budget speculation that the new regime standard deduction might increase to Rs. 1 lakh. That did not happen.

For AY 2026-27, use the same TA rates, exemption rules, and standard deduction amounts as AY 2025-26. Nothing in Budget 2026 changes the numbers.

Official Transport Allowance PDF Downloads and Resources

OM No.	Title	Date	Download
21/5/2017 – E.II (B)	Implementation of 7th CPC	07/07/2017	Primary TA Order
21/1/2018-E.II(B)	Transport allowance	29/07/2025	Disabled employees compendium
21/1/2018-E.II(B)	Transport allowance at double rates	15/09/2025	Earlier disabled order

Wrapping it Up

Transport allowance may seem like a small component of salary, but managing it correctly requires much more than knowing the rate table. HR and payroll teams need to account for city classifications, DA revisions, tax treatment, disability-related exemptions, arrear calculations, and non-payment conditions to ensure payroll remains accurate and compliant.

With the 8th Pay Commission expected to reshape salary structures in the coming years, organizations should also review their current payroll setup to ensure allowance calculations, taxability rules, and employee entitlements are configured correctly.

Keka helps organizations automate complex payroll calculations, manage salary components accurately, apply the latest tax rules, and stay compliant with changing regulations, without relying on manual spreadsheets or frequent payroll adjustments.

If you’re looking to simplify payroll administration and eliminate compliance risks, explore how Keka Payroll can help your team manage transport allowance and every other salary component with confidence.

Simplify transport allowance calculations, payroll processing, and compliance with Keka Payroll. Schedule a Demo

Frequently Asked Questions (FAQs)

Q1. What is the new tax regime allowance?

• Under the new tax regime, transport allowance is fully taxable for general employees. Disabled employees retain a ₹3,200 per month exemption under both regimes, and salaried employees can also claim the ₹75,000 standard deduction in the new regime.

Q2. What is the DA rate in January 2026?

• The Dearness Allowance for Central Government employees is 60% effective 1 January 2026, up from 58%. For example, a Level 9+ employee in a TPTA city gets ₹7,200 × 1.60 = ₹11,520 per month.

Q3. Who is eligible for a transport allowance?

• All regular Central Government employees are eligible unless they are provided government transport. Private sector employees may receive TA in their CTC, and eligibility can stop during full-month suspension, deputation abroad, or certain training periods.

Q4. What is the transport allowance in payroll?

• Transport allowance in payroll is a fixed monthly payment for commuting between residence and workplace. For Central Government employees, base rates range from ₹900 to ₹7,200 per month, plus 60% DA from January 2026, depending on pay level and city.

Q5. Which cities are classified as TPTA cities for higher transport allowance?

• The 19 higher TPTA cities are Delhi, Mumbai, Chennai, Kolkata, Bengaluru, Hyderabad, Ahmedabad, Pune, Surat, Kanpur, Jaipur, Lucknow, Nagpur, Patna, Indore, Kochi, Kozhikode, Ghaziabad, and Coimbatore.

Q6. What is the transport allowance exemption limit for disabled employees in 2026?

• Eligible disabled employees can claim ₹3,200 per month or ₹38,400 per year under Section 10(14) for AY 2026-27, as amended by the Finance Act 2026.