Let's start with the limit. There is no limit on the amount of transportation allowance that you can receive from your employer. However, there is a limit on the amount of allowance that will be free of tax.

The limit is Rs. 1600 per month, or Rs. 19200 annually. You can receive a higher amount from your employer, say Rs. 2000 per month. But you will have to pay tax on the excess amount of Rs 400 per month (Rs. 4800 annually).

If your allowance is less than Rs. 1600 per month, your entire allowance shall be tax free. You need not show it in your income tax return as a part of salary, rather you will show it under exempt income under "taxes paid and verification".

Additional point:

The limit of Rs. 1600 is for physically able individuals. If an individual is physically unable, the limit for such individuals shall be Rs 3200 per month.