Car Allowance Dilemma: What Costs Should We Consider Beyond Fuel and Maintenance?

Dear All Citehr Members,

Greetings!

We are providing a car allowance to our senior members today, considering only the following two components:
1. Petrol/Diesel cost.
2. Maintenance charges.

The total cost comes to around Rs. 6.00 per km. Are there any other parameters that should be considered in this calculation? If so, kindly suggest the same.

Regards,
Nilesh
+91 93774 13638

Hi Nilesh, car allowance for senior members of staff is welcome. The factors to be taken into account while deciding the amount of allowance are certainly the fuel cost, the maintenance, and the reasonable cost of driving. Rs 6/- per km for a petrol-driven car, considering long-term payment, is reasonable. For diesel-driven cars, the amount of allowance can be less. In certain companies, the amount of allowance is fixed, no matter where the employee comes from. This kind of per km allowance is applicable when an employee is present on duty and is asked to go to some place during working hours, which is not every day.

Vibhakar Ramtirthkar, [Email Removed For Privacy Reasons], [Phone Number Removed For Privacy-Reasons]

Please explain how the computation has been done. Today just cost of servicing costs ₹1000 per month and insurance is another ₹1000 to ₹3000 per month depending on the type of car
This is excluding any long term maintenance cost. Like replacement of battery, tyres and so on
If the vehicle is used for work, where in alternate they would take a taxi or ola / über, you should consider the alternate cost which is ₹10-15 per km in the city and give allowances that are fair.