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Conveyance allowance to wage workers??

anita (trainee) (514 Points)

24 August 2016

Can a monthly conveyance allowance of Rs 1,600/per month be paid to workers covered under ESIC/epf Act ?

Will this conveyance allowance attract esic or epf?

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Vinayak Hegde (CA) (154 Points)
Replied 25 August 2016

In case of ESIC Act:

The term “wages” has been defined u/s 2(22) of the Act in three parts as under:-

All remuneration paid or payable in cash to an employee, if the terms of the contract of employment, express or implied, were fulfilled.
and includes any payment to an employee in respect of any period of authorized leave, lock-out, strike which is not illegal or lay of.
and other additional remuneration, if any paid at intervals not exceeding 2 months.

However, it does not include:-
a. any contribution paid by the employer to any pension fund or provident fund or under ESI Act,
b. any traveling allowance or the value of any traveling concession,
c. any sum paid to the person employed to defray the special expenses entitled to him by the nature of his employment or
d. any gratuity payable on discharge

But Conveyance Allowance’ is wages as it arises out of contract of employment.

In case of PF Act:

Circular issued by EPFO on November 30th 2012 defines wages as-

“Basic wages by its own definition encompasses all the payments except the specified exclusions. All such allowances which are ordinarily, necessarily and uniformly paid to the employees are to be treated as part of the basic wages.

As conveyance is being paid ordinarily and uniformaly, it will be trated for calculation of salary for PF.