Dear Seniors, Should we consider Conveyance allowance as part of wages for ESIC contribution calculation purpose? Please clarify.
From India, Mumbai
121From India, Mumbai
Fixed conveyance allowance flowing out of a wage settlement should be treated as wages for all purposes w.e.f 01.04.2002.
However, the following should not be treated as wages u/s 2(22) of E.S.I Act and also for the purpose of
deciding the coverage of an employee under section 2(9) of the Act :
a)Amount towards conveyance paid or reimbursed to any employee for incurring expenses for specific duty related journey.
b)Reimbursement of actual cost of conveyance for coming to work and going from work on production of ticket or season ticket to proof actual expenditure.
c)Payment of certain amount for maintenance of vehicle depending upon cadre of the Official and category of the vehicle and subject to production of records for actually marinating the vehicles.
d)Fixed conveyance allowance paid at an interval exceeding two months, unless such payment is made as per contract of service or agreement.
Payment of conveyance allowance at a uniform basis regardless of whether the employee concerned has or has not incurred any expenditure on his journey to the place of his work and back home is part of “wages” (Karnataka High Court in the case of M/s Rajashree Cement and others v. ESIC 2004 LIC.2244;2004(102) FLR.836)
Regards,
Suresh
From India, Bangalore
However, the following should not be treated as wages u/s 2(22) of E.S.I Act and also for the purpose of
deciding the coverage of an employee under section 2(9) of the Act :
a)Amount towards conveyance paid or reimbursed to any employee for incurring expenses for specific duty related journey.
b)Reimbursement of actual cost of conveyance for coming to work and going from work on production of ticket or season ticket to proof actual expenditure.
c)Payment of certain amount for maintenance of vehicle depending upon cadre of the Official and category of the vehicle and subject to production of records for actually marinating the vehicles.
d)Fixed conveyance allowance paid at an interval exceeding two months, unless such payment is made as per contract of service or agreement.
Payment of conveyance allowance at a uniform basis regardless of whether the employee concerned has or has not incurred any expenditure on his journey to the place of his work and back home is part of “wages” (Karnataka High Court in the case of M/s Rajashree Cement and others v. ESIC 2004 LIC.2244;2004(102) FLR.836)
Regards,
Suresh
From India, Bangalore
I endorse Suresh ji cent percent and give further inputs as under:
Reference: HQ instruction No. T-11/13/53/08/2001-Ins IV dated 21.11.01 & 21.03.02.
This decision was based on conflicting judgments by some HCs which necessitated the review of earlier instructions dated 27.01.97 & 06.11.2000 wherein Conv. Allw. was not wages.
From India, Mumbai
Reference: HQ instruction No. T-11/13/53/08/2001-Ins IV dated 21.11.01 & 21.03.02.
This decision was based on conflicting judgments by some HCs which necessitated the review of earlier instructions dated 27.01.97 & 06.11.2000 wherein Conv. Allw. was not wages.
From India, Mumbai
Dear
Please correct me if i am wrong as according to my perception if we put a fixed amount as conveyance allowance in an employee salary then it should be considered as WAGES in calculation of ESIC.
Because we are providing Rs. 800/- as conveyance allowance to all our employees on monthly basis and as it is a monthly fixed amount, i am considering to calculate ESI.
Thanks
From India, Delhi
Please correct me if i am wrong as according to my perception if we put a fixed amount as conveyance allowance in an employee salary then it should be considered as WAGES in calculation of ESIC.
Because we are providing Rs. 800/- as conveyance allowance to all our employees on monthly basis and as it is a monthly fixed amount, i am considering to calculate ESI.
Thanks
From India, Delhi
Dear Reetu ji,
The conveyance allowance which you are paying to your employees-
i. it is not an amount towards reimbursement of expenses incurred by them for specific duty related journey; or
ii. it is not a reimbursement of actual cost of conveyance for coming to work and going from work on production of ticket or season ticket to proof actual expenditure; or
iii. it is not a payment of certain amount for maintenance of vehicle depending upon cadre of the Official and category of the vehicle and subject to production of records for actually marinating the vehicles; or
iv. it is not a fixed conveyance allowance paid at an interval exceeding two months.
But it is a fixed conveyance allowance paid every month.
The ESI will attract on this amount.
From India, Mumbai
The conveyance allowance which you are paying to your employees-
i. it is not an amount towards reimbursement of expenses incurred by them for specific duty related journey; or
ii. it is not a reimbursement of actual cost of conveyance for coming to work and going from work on production of ticket or season ticket to proof actual expenditure; or
iii. it is not a payment of certain amount for maintenance of vehicle depending upon cadre of the Official and category of the vehicle and subject to production of records for actually marinating the vehicles; or
iv. it is not a fixed conveyance allowance paid at an interval exceeding two months.
But it is a fixed conveyance allowance paid every month.
The ESI will attract on this amount.
From India, Mumbai
Even if it is a fixed amount monthly but if you are taking proof of expenditure (upto the limit fixed for the month and if the receipts of any employee is lets say Rs. 750/- so he should be given 750 only and not 800, I hope you get the point), in such cases it is not covered under ESI as part of wages because it is primarily reimbursement of expenses and not a fixed amount given irrespective of how it is used by the employee and you are not collecting proof of expenditure then it is covered as wages under ESI.
From India, Chennai
From India, Chennai
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