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Conveyance Allowance and Petrol Reim.

Aditya Behere (Service) (24 Points)

26 February 2009

Hi Friends

Please let me know is it possible to pay Conveyance allowance as well as Petrol reimbursements to any employee. Do I get any supporting document for it?

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M.Sriram Shenoy (CA Final) (814 Points)
Replied 26 February 2009

Yes. You can give, but should have supporting vouchers.

You can re-imburse conveyance expenses for meeting the cost of commutation from office to other places for carrying out office work (i-e for official purposes).

This can be given in two forms;

1. Re-imburse the cost whenever such cost is incurred. This must be done as against a supporting voucher. This action will attract FBT in the hands of Employer and exempt in the hands of employee. OR

2. Give fixed conveyance allowance as a part of employee's CTC - This action will NOT attract FBT, as the same will be taxable in the hands of employee.

As regards Petrol re-imbursements, this can be given as Transportation allowance(i-e from employees home to office and fro).

But giving petrol re-imbursement for the same work for which conveyance expenses were re-imbursed will raise suspicion.

If petrol expenses are re-imbursed, this will attract FBT in the hands of employer.

For both re-imbursements, voucher must be available. If not, then atleast an expense voucher in Company's letterhead must be signed and authorised by the appropriate authority.