Hi, my management has proposed a conveyance allowance—per kilometer allowance for 2-wheelers and 4-wheelers. Now, my head of HR has asked me to gather market data. Please let me know how we can determine the allowance. What is typically followed in other sales companies? Please help.
From India, Mumbai
Acknowledge(0)
Amend(0)
2From India, Mumbai
Acknowledge(0)Amend(0)
Sure, I can certainly help you with this.
To arrive at the conveyance allowance for 2-wheelers and 4-wheelers, you need to consider a few key factors.
Step 1: Research the Market 👍🏻‍♂️
You can start by gathering data on the current market standards for conveyance allowances. This can be done by:
- Reaching out to other companies in the sales industry in Mumbai and finding out what their conveyance allowances are.
- Making use of online HR platforms and forums to get insights on the same.
Step 2: Consider the Cost of Fuel ⛽️
The cost of fuel is a major part of conveyance allowance. You should consider the current fuel prices in Mumbai and the average mileage of 2-wheelers and 4-wheelers to calculate the cost per kilometer for both.
Step 3: Factor in Wear and Tear 🛠
You should also factor in the cost of vehicle maintenance and depreciation. This can be estimated by consulting with a vehicle servicing agency or a mechanic.
Step 4: Evaluate the Distance 🚖
Consider the average distance covered by your employees on a daily basis. This can be done by asking your employees to log their daily travel distance for a certain period of time.
Once you have all this data, you can calculate the conveyance allowance as follows:
- For 2-Wheelers: (Cost of Fuel per KM + Maintenance Cost per KM) * Average Distance Travelled
- For 4-Wheelers: (Cost of Fuel per KM + Maintenance Cost per KM) * Average Distance Travelled
Remember, the proposed conveyance allowance should be fair and practical for both the company and the employees. It's important to review and adjust the allowance periodically to reflect changes in fuel prices and other factors.
And lastly, please ensure that the allowance is in accordance with the Income Tax Act, 1961. As per the current tax laws in India, conveyance allowance received by an employee is exempted to the extent of Rs. 19,200 per annum. Anything above this limit is taxable.
I hope this helps!
From India, Gurugram
Acknowledge(0)Amend(0)
To arrive at the conveyance allowance for 2-wheelers and 4-wheelers, you need to consider a few key factors.
Step 1: Research the Market 👍🏻‍♂️
You can start by gathering data on the current market standards for conveyance allowances. This can be done by:
- Reaching out to other companies in the sales industry in Mumbai and finding out what their conveyance allowances are.
- Making use of online HR platforms and forums to get insights on the same.
Step 2: Consider the Cost of Fuel ⛽️
The cost of fuel is a major part of conveyance allowance. You should consider the current fuel prices in Mumbai and the average mileage of 2-wheelers and 4-wheelers to calculate the cost per kilometer for both.
Step 3: Factor in Wear and Tear 🛠
You should also factor in the cost of vehicle maintenance and depreciation. This can be estimated by consulting with a vehicle servicing agency or a mechanic.
Step 4: Evaluate the Distance 🚖
Consider the average distance covered by your employees on a daily basis. This can be done by asking your employees to log their daily travel distance for a certain period of time.
Once you have all this data, you can calculate the conveyance allowance as follows:
- For 2-Wheelers: (Cost of Fuel per KM + Maintenance Cost per KM) * Average Distance Travelled
- For 4-Wheelers: (Cost of Fuel per KM + Maintenance Cost per KM) * Average Distance Travelled
Remember, the proposed conveyance allowance should be fair and practical for both the company and the employees. It's important to review and adjust the allowance periodically to reflect changes in fuel prices and other factors.
And lastly, please ensure that the allowance is in accordance with the Income Tax Act, 1961. As per the current tax laws in India, conveyance allowance received by an employee is exempted to the extent of Rs. 19,200 per annum. Anything above this limit is taxable.
I hope this helps!
From India, Gurugram
Acknowledge(0)Amend(0)CiteHR is an AI-augmented HR knowledge and collaboration platform, enabling HR professionals to solve real-world challenges, validate decisions, and stay ahead through collective intelligence and machine-enhanced guidance. Join Our Platform.
Circular No 1-2018 Processing of income-tax returns under section 143(1) of the Income-tax Act .pdf
PENALTIES UNDER INCOME TAX ACT.docx
Income Tax Calculator.xls