Can We Offer Senior Staff a Fixed Allowance and Petrol Reimbursement Without Issues?

Dear All, can we give certain senior employees a standard conveyance allowance of ₹800 and then ₹1500 as petrol reimbursement against a bill? Will this create any issues, or is it okay to give?

If the ₹1500 is given against petrol bills, then I don't think it will be considered taxable income. However, it's suggested to prepare a reimbursement slip apart from the salary slip where all the reimbursements (the amount paid against bills) are documented.

Regards,
Arti

Dear All, what I meant by incentive was that it will be an attraction to my seniors. Apart from the usual travel allowance, they will have the facility of reimbursing ₹1000 or ₹1500 per month against proper petrol bills. This reimbursement will not be reflected in the salary slip but will be in separate reimbursement slips.

So, with my explanation and your answers, I will take it as a "Yes" that I can give a conveyance allowance which will be reflected in the salary slip, and petrol reimbursement will be in a separate slip and only payable against bills.

Thanks.

The way you have explained, it is nothing but additional income to employees. You are paying Rs. 800 as an allowance and some more amount as Petrol Reimbursement. Hence, even though you are calling it reimbursement, it is nothing but an allowance, and it needs to be taxed. Please consult your Tax Consultant before finalizing this arrangement. He may guide you to comply with the law by employing some strategies.

Petrol Reimbursement and Tax Implications

Petrol reimbursement paid for commuting between home and office cannot be tax-free. You may present this as Reimbursement Of Petrol Expenses for official work like visiting vendors, suppliers, customers, etc. However, such Petrol Reimbursement Claims need to be supported by a statement containing date-wise details such as the place visited, kilometers traveled, purpose of the visit, etc. It cannot be a uniform fixed amount every month, as it will logically depend upon actual traveling.

What I meant by incentive was that it will be an attraction to my seniors that apart from the usual travel allowance, they have the facility of reimbursing Rs. 1000 or Rs. 1500 per month against proper petrol bills. This reimbursement will not be reflected in the salary slip but will be in separate reimbursement slips.

So, with my explanation and your answers, I will take it as a yes, that I can give a conveyance allowance that will reflect in the salary slip and petrol reimbursement, which will be in a separate slip and only payable against bills.

Thanks.

Income Tax Rules on Conveyance Allowance

As per Income Tax rules, payment of ₹800 per month as conveyance allowance with salary is exempted from Income Tax. Employers can give any amount to employees as reimbursement, subject to certain conditions and company policies. However, if the amount is given as an allowance, it will be taxable.

Best wishes,

[QUOTE=hilmesh1611;1670163]Dear All, Can we give certain senior employees a standard conveyance allowance of Rs 800 and then Rs 1500 as petrol reimbursement against bills? Will this create any issue, or is it okay to give.

Dear Hilmesh, A conveyance allowance of Rs 800 per month is exempted from Income Tax. If your senior employee is entitled to a vehicle facility as per policy, you may reimburse petrol expenses. In that case, you should not pay the conveyance allowance. Both these reimbursements cannot be availed by an employee.

Chandrakant

I would like to ask under which section we can claim motor vehicle fuel and maintenance expenses. Can a person claim such an exemption when the vehicle is registered in the name of his father, and the registered owner of the vehicle (the father in this case) is not claiming such an exemption but is only claiming an exemption of ₹800 per month as conveyance?

Thank you in advance.

You may claim, and an employer may reimburse also, but it is not tax-exempt. It needs to be added to Taxable Income. If any employer is not adding it to Taxable Income, then it is nothing but evasion of tax.

Clarification on TA Component in Salary

Hello, I would like to inquire about the TA component in the salary. Does this TA include:

• Travel from residence to the office?
• Travel from residence to the office and other office requirements?

Your advice on this matter would be greatly appreciated.

Thank you,

Rakesh Kumar

As per income tax rules, ₹800 per month towards conveyance allowance is tax-free. Any amount paid above ₹800 becomes taxable in the hands of the receiver. However, reimbursement of conveyance on an actual basis is not taxable.

Thank you,