Let's break down the calculation of the tax exemption available for transport allowance based on the information provided.

Understanding Transport Allowance Exemption

Transport allowance is typically given by employers to employees to cover the cost of commuting between their residence and the office. Under income tax laws, certain allowances are fully or partially exempt from tax. The rules for transport allowance exemption have changed over time. However, based on the options provided and the likely context of the question, it appears to refer to a specific exemption limit that applied in certain scenarios or periods.

In the context where Rs. 1,600 p.m. is a relevant exemption limit, the rule states that the exemption allowed is the lower of:

• The actual transport allowance received by the employee.
• The prescribed statutory limit for exemption per month.

Calculating Mr. X's Transport Allowance Exemption

We are given the following information for Mr. X:

• Transport allowance received per month: Rs. 1,800
• Amount spent on commuting per month: Rs. 1,400
• Assumed prescribed statutory exemption limit per month (based on options and likely scenario): Rs. 1,600

Applying the rule mentioned above, the exemption is the minimum of the allowance received and the statutory limit. The amount spent (Rs. 1,400) is irrelevant in determining the exemption amount in this specific rule context, where the limit is fixed and compared against the allowance received, not the amount spent.

Let's calculate the exemption:

\(\text{Exemption} = \min(\text{Transport Allowance Received}, \text{Prescribed Limit})\)

In Mr. X's case:

\(\text{Exemption} = \min(\text{Rs. } 1,800, \text{Rs. } 1,600)\)

\(\text{Exemption} = \text{Rs. } 1,600\)

Therefore, the exemption allowed for Mr. X's transport allowance is Rs. 1,600 per month.

Analysis of Options

Let's examine the given options in light of our calculation:

Based on the calculation and analysis, the exemption allowed is Rs. 1,600 p.m.

Revision Table: Transport Allowance Exemption

Additional Information: Current Transport Allowance Rules

It is important to note that the income tax rules regarding transport allowance for general employees were modified. Effective from Assessment Year 2019-20, the separate exemption for transport allowance for most employees was withdrawn. Instead, employees can claim a standard deduction from salary income. However, a higher transport allowance exemption is still available for certain categories of employees:

• Employees who are visually challenged or orthopedically handicapped: A transport allowance exemption of Rs. 3,200 per month is available to these employees for commuting between residence and office. The amount spent is not relevant; it is a fixed monthly exemption.
• Other Employees (General): The exemption is no longer available as a separate item. Commuting allowance/transport allowance received is fully taxable and is covered under the standard deduction available from salary income (which covers various expenses, including transport allowance).

The question likely refers to a scenario or period where the Rs. 1,600 p.m. exemption limit was applicable, possibly as a general exemption before the rule change or specific to a category not explicitly mentioned.