How Should We Calculate Petrol Allowance Per Kilometer for Our Sales Team?

Our company is introducing a new policy. The company is in the furniture and fixtures industry. We have a Marketing and Sales Department. We want to implement a petrol price to be given per kilometer. Considering the petrol price is Rs. 73, how much petrol conveyance can be given per kilometer?

Petrol Expenses Reimbursement Policy

Petrol expenses reimbursement should not be standard for all employees. Employees entitled to using 4-wheelers should get around Rs. 8 per km, and employees using 2-wheelers should receive around Rs. 4 per km. If employees are using their personal vehicles, they should also receive fixed vehicle maintenance charges.

Regards,
Kamal

Could you please explain how we calculate travel reimbursement per kilometer? You mentioned Rs. 8/km for a 4-wheeler and Rs. 4/km for a 2-wheeler. How were these figures determined? Can you shed some light on the derivation and calculation process?

Thank you.

Regards,
[Name]

Calculation of Petrol Expense Per Kilometer

In the city, a 4-wheeler (6-7 years old) gives a minimum average of 10 km per liter. So, the actual expense is Rs. 7.5/- per kilometer.

For a 2-wheeler, the minimum average is 20 km per liter. The actual expense is Rs. 3.75/- per kilometer.

Ensure proper paragraph formatting with a single line break between paragraphs.

To consider the minimum average, it should be the standard one. For cars, the range is typically between 12-15 km per liter, while for two-wheelers, it is around 40-45 km per liter.

Reimbursement of Mileage for Personal Car Use

The reimbursement of mileage for the use of a personal car on company work is not calculated solely based on the price of petrol and the fuel consumption rate of the vehicle. It includes amortized expenses on account of:

- Price of petrol and 10-12 km/litre for non-AC usage and 8-10 km/litre for AC ones.
- Cost of normal wear and tear, insurance, road tax, and driver salary (if entitled). For senior management, even the EMI on the car may be included.

On average, at today's prices and rates, the reimbursement per kilometer would be a minimum of Rs. 10/- per km for non-AC and Rs. 12/- per km for AC. If you were to hire a car, you would be paying a minimum of Rs. 12/- per km for non-AC (other than the usual battered Ambys/Indicas) and Rs. 15/- per km for an AC Indigo.

I trust this information will prove useful, and I have provided the rates applicable to a metro city like Mumbai, Delhi, etc.

Regards,
UG

This is very helpful information. This has helped me in preparing the reimbursement policy.

Dear all, can anyone update me on the formula for calculating the fuel price? I want to fix the petrol/diesel reimbursement price in my company. Please suggest how to decide the rate for reimbursement per km.

Regards, Yamini

Dear all,

Could someone please update me on the formula for calculating the fuel price so that a per km charge can be prepared for senior management personnel in our organization? I aim to set a fixed petrol/diesel reimbursement price in my company.

Please suggest how to determine the rate for reimbursement per km.

Regards,
Javed

Dear All,

I think for a two-wheeler, the formula should be considered as follows:

The current fuel price is Rs. 83 (which can vary from city to city).
The average mileage of a two-wheeler is considered to be 45 KM/l.
83/45 = 1.84/KM
Hence, Rs. 1.84/KM will be the fair price.

Correct me if I am wrong.

Hi all,

I want to know from an accounts perspective, how to account for reimbursing these per km charges to employees. Will it be paid along with the salary as an allowance, and respective TDS will be calculated? Or will it be paid against the policies of the company, in which case there will be no supporting of expenses?

Please suggest.

Thanks