Seeking Advice on Switching to Per-Kilometer Reimbursement for Sales Team Travel in Bangalore

Hi all:

Ours is a service industry in Bangalore.

We are paying a consolidated fixed amount towards conveyance every month to the Sales and Marketing personnel, along with the salary - but paid separately. The voucher will indicate reimbursement of conveyance expenses for the month of ____.

I plan to introduce a system wherein the employee will be reimbursed per km for the distance traveled by them. The employee has to provide details of the places/parties visited and indicate the distance, as well as the meter reading for the distance traveled. Based on this, the reimbursable amount shall be paid to them - maybe weekly/fortnightly.

With the introduction of this system, the existing system of paying a consolidated amount per month will be discontinued.

I require suggestions for the above. If agreeable, what should be the reimbursable amount payable per km for 2-wheelers - mopeds, scooters/motorcycles, and also for 4-wheelers - fuel-efficient cars and others.

Kindly assist me in drafting a suitable system.

Regards,

Dhinakaran

Two Wheelers - Rs. 2.50 - 3.00 Car - Rs. 5.50 - 6.50

But may I know why you want to withdraw the consolidated allowance? It will be easier to administer and thus less time-consuming.

Some negatives of the Consolidated system: 1. It will attract Income Tax. 2. Even if a person is on paid leave, the allowance will be paid.

Negatives of the reimbursement system: 1. Obtaining authorization from superiors will be a big task. 2. Ensuring whether everyone has received it will be another uphill task. 3. Time-consuming as you need to have many checkpoints in the process.

Regards, Sathiyamoorthy Iyer

Dear Sathiya Murthy Iyer,

I intend to withdraw the consolidated amount since payment of a constant amount every month may not be considered as reimbursement. Also, if the employees spend more than the amount, they tend to lose, which, in turn, will make the employees curb their movement to the extent of the amount paid.

The new system I envisage introducing will make the employees more mobile, which will result in better outcomes. I hope you agree with me.

Please comment.

Regards,
Dhinakaran

Dear Dinakaran,

Thank you for the reply. Initially, we had a reimbursement system, which was time-consuming and required many checks. Therefore, we have shifted to an allowance system. This change has moved some employees out of the Rs. 10,000/- slab for ESI. Since we already provide insurance for all employees, this adjustment has been beneficial for us.

Any individual who has exceeded the eligible conveyance amount will be reimbursed separately, though this scenario is rare for us.

Please use your judgment as the assumptions I have made may not be relevant to your industry. Thank you for sharing your insights.

Regards,
Sathiyamoorthy Iyer
Regards,
Sathya

Dear Dinakaran,

I understand that it may be different for you, being in India, and planning travel policies regarding fuel and other items. In my company, we have created a separate annexure (which changes from time to time) that details all travel-related items such as Daily Allowance, Personal Guest Allowance (PGA), hotels, meals, fuel, etc. Perhaps you will find it helpful in developing your own policies.

Regards,
Sultan Mughal
Manager HR
Wazir Ali Industries Limited
Contact: +92 - 333 - 4431122
Email: sultanmughal@gmail.com
sultanmughal@hotmail.com
sultanmughal@yahoo.com
sultan@tullo.com.pk