Can a company provide Conveyance and Medical allowances of less than $800 and $1250, respectively? For example: Conveyance Allowance: $600, Medical Allowance: $1000. Is there any problem with this?
I have not come across any statute prescribing any minimum limit for HRA or conveyance allowance. In the absence of it, the contract of service shall govern the issue. Thus, unless you have contracted to pay conveyance or medical allowance at the rates mentioned above, i.e., Rs 800/- and Rs 1250/-, there should not be any problem in paying Rs. 600/- and Rs. 1000/-.
Conveyance Allowance and Medical Assistance components (Rs. 800/- and Rs. 1250/- per month respectively) are the maximum tax-exempted components as per Income Tax rules. It is not mandatory to stick to the maximum limit.
I have mentioned in my earlier reply that I have not come across any law on HRA. It should be read as a medical allowance. So far as HRA is concerned, some states like Maharashtra have passed a law on the minimum HRA to be granted by establishments.
Conveyance and Medical Allowance are benefits that can be extended by management. There is no statutory requirement for these benefits. Management may choose to offer these facilities based on their financial returns.
Regards,
D. Gurumurthy
LL.HR.IR Consultant
Hyderabad
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