Transport allowance

Transport allowance is the fixed monthly amount a central government employee draws to meet the cost of commuting between residence and place of duty, set at Rs. 7,200, Rs. 3,600 or Rs. 1,350 a month by pay level in 19 specified cities and at Rs. 3,600, Rs. 1,800 or Rs. 900 elsewhere, with dearness allowance added on top, under Department of Expenditure Office Memorandum No. 21/5/2017-E.II(B) dated 7 July 2017 with effect from 1 July 2017.

The allowance behaves differently from house rent allowance in the one way that shows on a pay slip. It is a flat rupee figure by slab rather than a percentage of basic pay, and every rate in the order is written as the figure “plus DA thereon”, so the amount credited rises at every dearness allowance revision even though the slab in the order has not moved since 2017. At a dearness allowance of 60%, the Rs. 7,200 slab is credited as Rs. 11,520.

Two rules attached to the allowance change more often than the rates do. Levels 1 and 2 move up a slab once basic pay reaches Rs. 24,200, a condition added by a modification order of 2 August 2017 rather than by the parent order. And the income-tax position for employees with a qualifying disability changed on 1 April 2026, when the Income-tax Rules, 2026 raised the exemption from Rs. 3,200 a month to Rs. 15,000 a month plus dearness allowance in the eight metros and Rs. 8,000 elsewhere.

This article sets out the rate table, the dearness allowance computation, the 19 cities and how they differ from the house rent allowance classification, the Levels 1 and 2 threshold, the official-car option at Level 14 and above, the double rate for the four qualifying disability categories, the seven circumstances in which the allowance is not admissible, what the allowance is not counted towards, and its income-tax treatment for the financial year 2026-27.

The rate table

Transport allowance is Rs. 7,200 a month for Level 9 and above, Rs. 3,600 for Levels 3 to 8 and Rs. 1,350 for Levels 1 and 2 in the cities named in the annexure to Office Memorandum No. 21/5/2017-E.II(B) dated 7 July 2017, and Rs. 3,600, Rs. 1,800 and Rs. 900 respectively at all other places. Every figure carries dearness allowance on top.

The level is the employee’s level in the pay matrix. An employee who opted to remain in the pre-revised pay structure is placed by the corresponding level of the post occupied on 1 January 2016, as indicated in the CCS (Revised Pay) Rules, 2016, rather than by the pre-revised scale itself.

The slabs have not been revised since 1 July 2017. What has changed is the dearness allowance multiplier applied to them, which is why the credited figure in 2026 is roughly 1.6 times the figure the order names.

Dearness allowance on the allowance

Dearness allowance is payable on transport allowance, which makes the credited amount the slab figure multiplied by one plus the current dearness allowance rate. The 2017 order states each rate as the amount “plus DA thereon”, so this is a term of the rate itself rather than a separate payment.

The dearness allowance is 60% of basic pay with effect from 1 January 2026, notified by Department of Expenditure Office Memorandum No. 1/1(i)/2026-E.II(B) dated 22 April 2026, so the multiplier is 1.60. A Level 9 employee posted in one of the 19 cities receives Rs. 7,200 multiplied by 1.60, which is Rs. 11,520 a month. A Levels 3 to 8 employee in the same city receives Rs. 5,760, and a Levels 1 and 2 employee below the pay threshold receives Rs. 2,160.

This is the opposite of house rent allowance, which carries no dearness allowance and moves only when the percentage or the basic pay changes. It is also coarser than the conveyance allowance escalation, which rises in a single 25% step each time dearness allowance gains 50 percentage points rather than at every revision.

The 19 higher-rate cities

Nineteen urban agglomerations qualify for the higher rate, listed in the annexure to Office Memorandum No. 21/5/2017-E.II(B) on the reclassification of cities under the 2011 Census with effect from 1 April 2015. They are Hyderabad, Patna, Delhi, Ahmadabad, Surat, Bengaluru, Kochi, Kozhikode, Indore, Greater Mumbai, Nagpur, Pune, Jaipur, Chennai, Coimbatore, Ghaziabad, Kanpur, Lucknow and Kolkata. Every other posting takes the “all other places” column.

This list is not the X class list used for house rent allowance, and treating the two as one is the most common error made in reading a central government pay slip. The house rent allowance classification recognises eight X class cities and is fixed by a separate order, described in city classification for HRA. Eleven of the 19 higher-rate transport allowance cities are not X class: Patna, Surat, Kochi, Kozhikode, Indore, Nagpur, Jaipur, Coimbatore, Ghaziabad, Kanpur and Lucknow.

An employee posted in Lucknow therefore draws transport allowance at the higher city rate and house rent allowance at the Y class rate of 20% of basic pay. Nothing links the two classifications: the transport allowance list is fixed by the annexure to the transport allowance order, and the house rent allowance list by the house rent allowance order.

Levels 1 and 2 and the Rs. 24,200 threshold

An employee in Level 1 or Level 2 whose basic pay has reached Rs. 24,200 is paid transport allowance at the Levels 3 to 8 slab, Rs. 3,600 a month plus dearness allowance in a higher-rate city and Rs. 1,800 elsewhere, instead of the Rs. 1,350 and Rs. 900 of the Levels 1 and 2 row.

That condition does not appear in the 7 July 2017 order. It was added by Office Memorandum No. 21/5/2017-E.II(B) dated 2 August 2017, in modification of the parent order and with effect from the same 1 July 2017. The threshold is basic pay, that is the cell value in the pay matrix, and not basic pay plus dearness allowance.

The practical effect is that a long-serving Level 1 or Level 2 employee crosses the threshold through the annual increment rather than through promotion, and the transport allowance jumps at that point. In a higher-rate city the base moves from Rs. 1,350 to Rs. 3,600, which at a dearness allowance of 60% is a rise from Rs. 2,160 to Rs. 5,760 a month.

The official-car option at Level 14 and above

An officer in Level 14 or above who is entitled to the use of an official car may either take the car or draw transport allowance at Rs. 15,750 a month plus dearness allowance, and not both. The entitlement to a car is the one conferred by Department of Expenditure Office Memorandum No. 20(5)-E.II(A)/93 dated 28 January 1994, which the 2017 order incorporates by reference.

Two procedural conditions attach. The administrative Ministry examines the option the officer exercises, and the competent authority must certify that the officer is entitled to the use of an official car under the 1994 order before the Rs. 15,750 rate is allowed. Once an officer opts to draw the allowance, the option cannot be changed for the remaining period of the current assignment.

At a dearness allowance of 60%, the Rs. 15,750 rate is credited as Rs. 25,200 a month. The rate is not tied to the city of posting: an officer who takes the allowance in lieu of the car draws the same figure in Delhi and outside the 19 cities alike, because the Rs. 15,750 provision stands apart from the slab table rather than doubling it.

The double rate for four disability categories

An employee in one of four disability categories is paid transport allowance at double the normal rate, and in no case less than Rs. 2,250 a month plus dearness allowance. The four categories named in Office Memorandum No. 21/5/2017-E.II(B) dated 7 July 2017 are the visually impaired, the orthopaedically handicapped, the deaf and dumb or hearing impaired, and those with a spinal deformity.

The entitlement is older than the 7th CPC. The 2017 order carries it forward from Department of Expenditure Office Memorandum No. 19029/1/78-E.IV(B) dated 31 August 1978 and the orders that followed it, including Office Memorandum No. 21(2)/2008-E.II(B) dated 29 August 2008. Those instructions were consolidated into a single compendium issued as Office Memorandum No. 21/1/2018-E.II(B) dated 15 September 2022, reissued on 29 July 2025, which is the document a drawing and disbursing officer works from.

The double rate is claimed on a certificate rather than on a self-declaration. The employee obtains a recommendation from the Head of the Orthopaedics Department, the Head of the Ophthalmology Department or the Head of the ENT Department of a government civil hospital, according to the disability.

The double rate does not relax the ordinary conditions of drawal. A qualifying employee still loses the allowance for a calendar month wholly covered by leave or by suspension, on the same terms as anyone else. Doubling changes the rate, not the entitlement.

The last row is where the Rs. 2,250 floor does work. Doubling Rs. 900 gives Rs. 1,800, which is below the floor, so a Level 1 or Level 2 employee with a qualifying disability outside the 19 cities draws Rs. 2,250 plus dearness allowance rather than Rs. 1,800 plus dearness allowance.

When transport allowance is not admissible

Transport allowance is not admissible to an employee who has been provided with the facility of government transport, and it is withdrawn for a calendar month wholly covered by an absence. The 2017 order sets out seven separate circumstances, and they do not all work the same way.

• Leave. Not admissible for a calendar month wholly covered by leave.
• Deputation abroad. Not admissible for the period of the deputation.
• Tour. Not admissible for a calendar month in which the employee is absent from headquarters for the whole month. Where the absence does not cover a calendar month in full, the allowance is paid for the full month.
• Training treated as duty. Payable during the training if no transport facility, travelling allowance or daily allowance is provided for attending the institute. Not payable where an official tour during the course, or a training spell abroad, covers a whole calendar month.
• Inspection, survey or continuous field duty. Not payable for a calendar month in which the employee receives road mileage, daily allowance or free transport for field, inspection or survey duty for the whole month.
• Vacation staff. Payable unless free transport is provided, and not admissible where the vacation spell, including all kinds of leave, covers whole calendar months.
• Suspension. Not payable for calendar months wholly covered by suspension, and this holds even if the suspension period is later treated as duty.

Suspension is the one head that is not all-or-nothing by the month. Where a suspension period covers a calendar month only partially, the transport allowance payable for that month is reduced proportionately. For leave and for tour the opposite rule applies: an absence that stops short of a full calendar month costs the employee nothing, and the whole month’s allowance is paid.

The common thread is that the allowance compensates an actual commute. Where the employee is not required to attend office, or the cost of travel is being met in another way, the allowance is withdrawn for the period in which that is true. Suspension is treated as absence for this purpose even though the employee remains in service.

What transport allowance is not counted towards

Transport allowance forms no part of the base for pension, gratuity, National Pension System contributions, General Provident Fund subscriptions or house rent allowance. It is a reimbursement-style allowance that is paid with salary but that enters none of the derived computations.

Emoluments for pension under Rule 31 of the CCS (Pension) Rules, 2021 are basic pay alone. Emoluments for gratuity are basic pay plus dearness allowance, and non-practising allowance where admissible. Neither definition reaches transport allowance.

The National Pension System and Unified Pension Scheme contributions, 10% from the employee and 14% from the government, are computed on basic pay plus dearness allowance. House rent allowance is a percentage of basic pay alone. So a rise in transport allowance raises take-home salary rupee for rupee, less tax, and changes nothing else on the pay slip.

Transport allowance also stops on the last day of service. It is not carried into pension in any form, and a pensioner draws dearness relief computed on the pension rather than on any former allowance.

Transport, conveyance and travelling allowance compared

Three central government payments cover travel, and they meet three different costs. Transport allowance pays for the daily commute, conveyance allowance pays for frequent local official travel in the employee’s own vehicle under SR-25, and travelling allowance reimburses a specific official journey away from headquarters.

The three can be drawn together. A doctor may draw transport allowance for the commute, conveyance allowance for domiciliary visits and travelling allowance for an official tour to a conference in the same month, because each pays for a journey the others do not.

One overlap is barred, and it sits inside the travelling allowance column rather than between the three heads. The proviso to Supplementary Rule 26 stops a government servant in receipt of a conveyance allowance granted for the upkeep of a motor car or motor cycle from drawing mileage or daily allowance for a journey performed by that motor car or motor cycle, except on such conditions as the sanctioning authority prescribes. So the doctor above may claim the fare for a tour by rail, but not road mileage for driving the car whose upkeep the conveyance allowance already meets.

The non-admissibility rule that withdraws transport allowance for a month spent wholly on tour follows from this division. For that month the journeys are covered by travelling allowance instead, so paying transport allowance as well would compensate the same travel twice.

Income-tax treatment for 2026-27

Transport allowance is fully taxable salary for an employee without a qualifying disability, and it has been since the Finance Act 2018 withdrew the exemption. The Rs. 1,600 a month exemption, worth Rs. 19,200 a year, and the separate Rs. 15,000 medical reimbursement exemption were both replaced by a single standard deduction, now Rs. 75,000 under the new regime and Rs. 50,000 under the old.

The standard deduction is a flat figure that does not vary with the transport allowance drawn, so there is no longer any computation to make. The allowance is added to salary in full and the deduction is allowed against total salary income like any other. For the financial year 2026-27 that deduction sits in Section 19 of the Income-tax Act, 2025, the successor to Section 16(ia) of the Income-tax Act, 1961, and the amounts are unchanged by the renumbering.

One exemption survives, and it was substantially enlarged on 1 April 2026. An employee who is blind, or deaf and dumb, or orthopaedically handicapped with a disability of the lower extremities may exempt transport allowance up to Rs. 15,000 a month plus dearness allowance thereon in the eight metro cities, and Rs. 8,000 a month plus dearness allowance elsewhere, under rule 15 of the Income-tax Rules, 2026. Those Rules were notified on 20 March 2026 by Central Board of Direct Taxes Notification No. 22/2026, G.S.R. 198(E), and came into force on 1 April 2026, replacing the Income-tax Rules, 1962.

The Rs. 3,200 limit still governs the return for the financial year 2025-26. The higher limits apply from the financial year 2026-27, which is the assessment year 2027-28, and they apply under the old regime and the default new regime alike, unlike most allowance exemptions, which the new regime removes.

The eight metro cities are Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad. The last four were added by the Income-tax Rules, 2026, and it is the same eight-city list that Rule 279 of those Rules applies to the 50% limb of the house rent allowance exemption.

The exemption and the allowance now diverge by city

The 19 higher-rate transport allowance cities and the eight income-tax metros are different lists, so from the financial year 2026-27 a disabled employee’s exemption depends on which list the city of posting falls in. This comparison is a salary-calculator.in construction, derived by reading the annexure to the 2017 order against the metro list in the Income-tax Rules, 2026; neither document draws it.

A Level 9 employee with a qualifying disability posted in Pune draws double transport allowance of Rs. 14,400 plus dearness allowance, which is Rs. 23,040 a month at 60%. Pune is one of the eight metros, so the exemption ceiling is Rs. 15,000 plus dearness allowance, or Rs. 24,000, and the whole Rs. 23,040 is exempt.

The same employee posted in Lucknow draws the identical Rs. 23,040, because Lucknow is one of the 19 higher-rate cities. Lucknow is not one of the eight metros, so the ceiling is Rs. 8,000 plus dearness allowance, or Rs. 12,800, and Rs. 10,240 a month is taxable. Eleven of the 19 higher-rate cities fall on this side of the line: Patna, Surat, Kochi, Kozhikode, Indore, Nagpur, Jaipur, Coimbatore, Ghaziabad, Kanpur and Lucknow.

For the wider treatment of salary and the choice between regimes, see income tax for government employees.

Who is covered and who is not

Office Memorandum No. 21/5/2017-E.II(B) applies to all civilian employees of the central government, including civilian employees paid from the Defence Service Estimates. It does not itself cover armed forces personnel or railway employees: the order states that separate orders would be issued by the Ministry of Defence and the Ministry of Railways, which they were, on the same rates.

For staff of the Indian Audit and Accounts Department the order issued in consultation with the Comptroller and Auditor General of India, as Article 148 of the Constitution requires for their conditions of service.

Employees of autonomous bodies, public sector undertakings and state governments are outside the order entirely. An autonomous body adopts central government allowance rates only where its own governing council resolves to do so and the administrative Ministry concurs, and a public sector undertaking on industrial dearness allowance runs a separate pay structure in which transport allowance may not exist as a distinct head at all.

An employee on deputation draws transport allowance from the borrowing organisation on that organisation’s rules where deputation is to a body outside the central government, and on these rates where the deputation is within it.

Bearing on the 8th Central Pay Commission

No 8th Central Pay Commission transport allowance rate exists, and none will until the Commission reports and revised rules are notified. The Commission was constituted by Department of Expenditure Resolution F. No. 01-01/2025-E.III(A) dated 3 November 2025 and will review allowances alongside pay, so the 2017 rates plus the current dearness allowance remain in force in the meantime.

The allowance has already risen substantially without any change to the slab, which is the point most often missed in projections. The Rs. 7,200 base was credited as Rs. 7,200 in July 2017, when dearness allowance stood at 1%, and is credited as Rs. 11,520 at 60%. A pay commission revision resets the base slab and the dearness allowance counter together, so a higher new slab does not automatically mean a higher credited amount on the day it takes effect.

Whether the 8th Central Pay Commission retains the structure at all is open. The 7th CPC itself rationalised a much longer list of allowances, and the staff side has pressed for the 19-city annexure to be widened and for the Levels 1 and 2 slab to be merged upward. Those are demands before the Commission, not decisions.

Worked examples

The amount credited is the slab figure multiplied by one plus the dearness allowance rate, which is 1.60 at 60%.

• A Level 10 officer posted in Bengaluru, one of the 19 cities, draws Rs. 7,200 plus 60%, which is Rs. 11,520 a month.
• A Level 6 employee in Bengaluru draws Rs. 3,600 plus 60%, which is Rs. 5,760 a month.
• A Level 6 employee posted in a town outside the 19 cities draws Rs. 1,800 plus 60%, which is Rs. 2,880 a month.
• A Level 2 employee on basic pay of Rs. 23,100 in Kanpur draws Rs. 1,350 plus 60%, which is Rs. 2,160. After the next annual increment takes basic pay past Rs. 24,200, the same employee draws Rs. 3,600 plus 60%, which is Rs. 5,760.
• A Level 12 officer in Delhi with a spinal deformity draws double the Level 9 and above rate, Rs. 14,400 plus 60%, which is Rs. 23,040 a month, all of it exempt from income tax in the financial year 2026-27.
• A Level 15 officer in Delhi who is entitled to an official car and opts for the allowance instead draws Rs. 15,750 plus 60%, which is Rs. 25,200 a month, and cannot revert to the car for the rest of the assignment.
• A Level 7 employee in Chennai who is on earned leave from 3 March to 20 March draws the full Rs. 5,760 for March, because the absence does not cover the whole calendar month.
• A Level 7 employee in Chennai suspended from 10 March draws a proportionately reduced transport allowance for March and nothing for April.

To see transport allowance in the full salary build-up alongside basic pay, dearness allowance and house rent allowance at a chosen level and city, use the 7th CPC salary calculator or the dedicated transport allowance calculator.

Related Articles

• Deductions allowed in the new tax regime
• Cycle (Maintenance) Allowance
• Allowances for central government employees
• Conveyance allowance
• Travelling allowance (TA)
• Daily allowance on tour
• Composite transfer grant
• Leave Travel Concession
• Dearness allowance
• Dearness relief
• House rent allowance
• Extraordinary leave
• HRA exemption under Section 10(13A)
• City classification for HRA
• 7th Central Pay Commission
• 8th Central Pay Commission
• 6th Central Pay Commission
• CCS (Revised Pay) Rules, 2016
• Central government employees in India
• Pay matrix
• Minimum pay
• Annual increment
• Suspension
• Non-practising allowance
• Military service pay
• Children education allowance
• Standard deduction
• Income tax for government employees
• Income-tax Act 2025
• Take-home salary of central government employees
• Central government pension
• CCS (Pension) Rules, 2021
• Gratuity for central government employees
• National Pension System
• Unified Pension Scheme
• Department of Expenditure
• Department of Personnel and Training
• 7th CPC salary calculator
• Transport allowance calculator
• DA arrears calculator
• HRA calculator

External references

• Department of Expenditure, Ministry of Finance
• Transport allowance order, Office Memorandum No. 21/5/2017-E.II(B) (doe.gov.in)
• Department of Expenditure: orders and circulars
• Department of Expenditure: pay related matters
• 7th Central Pay Commission report (doe.gov.in)
• Income Tax Department
• Department of Personnel and Training

References

1. Ministry of Finance, Department of Expenditure, Office Memorandum No. 21/5/2017-E.II(B), dated 7 July 2017, on the grant of transport allowance to central government employees: the rate table, the conditions in paragraph 3, the disability provision at paragraph 3(iii), the Level 14 option at paragraph 3(iv), the seven circumstances in paragraph 3(a) to 3(g), and the annexure of 19 cities.
2. Ministry of Finance, Department of Expenditure, Office Memorandum No. 21/5/2017-E.II(B), dated 2 August 2017, in modification of the parent order, on transport allowance for Levels 1 and 2 employees drawing basic pay of Rs. 24,200 or more.
3. Ministry of Finance, Department of Expenditure, Office Memorandum No. 19029/1/78-E.IV(B), dated 31 August 1978, and Office Memorandum No. 21(2)/2008-E.II(B), dated 29 August 2008, on transport allowance at double the normal rates for physically disabled employees.
4. Ministry of Finance, Department of Expenditure, Office Memorandum No. 21/1/2018-E.II(B), dated 15 September 2022, reissued 29 July 2025: compendium of instructions on the grant of transport allowance at double the normal rates to persons with disabilities.
5. Ministry of Finance, Department of Expenditure, Office Memorandum No. 20(5)-E.II(A)/93, dated 28 January 1994, on entitlement to the use of an official car.
6. Ministry of Finance, Department of Expenditure, Office Memorandum No. 1/1(i)/2026-E.II(B), dated 22 April 2026, revising dearness allowance to 60% of basic pay with effect from 1 January 2026.
7. Central Board of Direct Taxes, Notification No. 22/2026 [F. No. 370142/41/2025-TPL], G.S.R. 198(E), dated 20 March 2026, notifying the Income-tax Rules, 2026 with effect from 1 April 2026; rule 15 prescribes the transport allowance exemption for employees with a specified disability, and Rule 279 the house rent allowance limits.
8. Income-tax Act, 2025 (Act No. 30 of 2025), in force 1 April 2026: Section 19 (deductions from salaries, including the standard deduction) and Schedule III (prescribed allowances), the successors to Sections 16(ia) and 10(14) of the Income-tax Act, 1961.
9. Finance Act 2018, withdrawing the transport allowance and medical reimbursement exemptions and introducing the standard deduction; Finance (No. 2) Act 2024, setting the new-regime standard deduction at Rs. 75,000.
10. Central Civil Services (Revised Pay) Rules, 2016 (gazette notification G.S.R. 721(E), 25 July 2016), for the pay matrix levels the rate table is keyed to.
11. Ministry of Finance, Department of Expenditure, Resolution F. No. 01-01/2025-E.III(A), dated 3 November 2025, constituting the 8th Central Pay Commission.