Recent Court Ruling: Do ESI Contributions Apply to Conveyance Allowance? Let's Discuss!

Recent Judgment on ESI Contributions

Please find the recent judgment of the Honorable High Court of Andhra Pradesh holding that ESI contributions need not be paid on conveyance allowance.

Thanks & Regards,

C. NIRANJAN RAO
Advocate
HIG-II, BLOCK NO.22, FLAT NO.8,
BAGH LINGAMPALLY, HYDERABAD.
PH: [Phone Number Removed For Privacy Reasons] (O) [Phone Number Removed For Privacy Reasons] (M)
Email: [Email Removed For Privacy Reasons]
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Hi Niranjan, I think as per Section 2(9) and under Section 2(22) of the ESI Act, conveyance allowance was excluded from the definition of wage, so it was not part of ESI contribution. Correct me if I am wrong.

If the Conveyance Allowance is directly related to expenditure incurred in traveling, then ESI is not payable; otherwise, ESI is payable.

Regards,
SC

Page Discrepancy

Page No. 7 has been repeated, and page No. 8, presumably the page on which the Order is passed, is not available. Please check and send it again.

Difference Between Travelling Allowance and Conveyance Allowance

There is a difference between Travelling Allowance and Conveyance Allowance. The former is paid at a fixed rate depending on the kilometers traveled or the class in which the journey was undertaken, whether from residence to office and back or for any official visit. In contrast, Conveyance Allowance is a fixed sum. If we say that it is a payment made to employees to commute to and from residence, it cannot be uniform, as all employees of a particular pay scale may not reside in the same place and may not incur the same amount. This implies it is a part of the salary only.

The above statement reflects my perception of it. There may be differences of opinion.

Regards,
Madhu.T.K

Mr. Madhu is absolutely right. All allowances are part of the salary, while all expenses that are reimbursed are not.

Regards,
SC

That is the case with government service also. However, the same cannot be applied here in the case of ESI or EPF, which stands for private establishments. If we take the same concept here as well, I think that the conveyance allowance paid will become part of the salary since it is included in the terms of service. In other words, any amount arising out of a settlement will be presumed to be part of the remuneration payable to the person on whom the settlement is binding.

Regards,
Madhu.T.K

Dear all, Upon reviewing the two judgments, it was noted that there is a difference between conveyance allowances and traveling allowances. If conveyance is fixed, then it will be a part of the salary. However, if it is claimed, then it should not be considered a part of the salary but should be treated as reimbursement. ESIC should be deducted from fixed allowances, not from reimbursements.

Thanks and regards,
Sumit Kumar Saxena