When employees reach on time to their workplace, it reflects in the overall productivity of the organization. Middle and senior management in any organization have several responsibilities on their shoulders and their time is valuable. That’s why organizations provide the motivation of conveyance allowance to their employees. With this allowance, employees can compensate for their travel from their residence, and to and from their respective workplace location as well as save taxes. However, if the employers are providing any office transport, the conveyance allowance may not be offered to their employees.
There is no limit for the conveyance allowance that can be offered to employees. But there is a limit to which the amount will be exempted under the Income Tax Act. This exemption is provided under Section 10(14)(ii) of Income-tax Act and Rule 2BB of the Income Tax Rules.
Until April 2015, the conveyance allowance exemption limit was INR 800 per month or INR 9,600 for a year. But, now the limits have been extended to INR 1,800 per month for cars with an engine capacity of 1.6 litres and INR 2,400 per month with an engine capacity that is greater than 1.6 litres. Annually, this amounts to INR 21,600 and INR 28,800 respectively. Employees do not need to furnish any documents or proof of receiving conveyance allowance.
Vehicle Is Used Exclusively For Official Purposes
If the car is used only for official purposes, irrespective of who owns the car i.e. employer or employee, then there is no taxable prerequisite for the employees. But how to ascertain that the car was used for official purposes only? For this, the income department says:
- The employer has to maintain the complete details of the journey
- Furnishing of the certificate by the employer that expenditure was incurred wholly and exclusively for official purposes.
Vehicle Is used For Personal Purposes
If the employee uses a company-owned car provided by the employer for personal use then the employee is fully taxed. In the same way, if the employee uses its own car and the reimbursements are made for the maintenance or meeting the running expenses then these expenses are fully taxable.
Complexities Are Many
The biggest challenge of fuel reimbursements are the complications that arise in the management of bills and the other details of the journey. It is where a digital solution comes handy. There are many advantages to it and let’s see them one by one.
– Grants On Click
With a digital reimbursement solution like Zeta Optima, the employers can send the grants in a click. It makes the entire process very quick and corporates can save a lot of time, which can be used for more important tasks.
You can customize how the grants are going to be spent by the employees. Digital reimbursement solution is a great tool for employers, as they have more control now.
The solution covers conveyance allowance, fuel benefits, and much more. There is an additional Driver’s Salary solution which can also be of use.
With this solution, Optima experts manage the verification of employee claims and free up a lot of resource time.
Although there are many challenges in managing the conveyance allowance, fuel benefits, etc. the implementation of digital solution like Zeta Optima helps employers leverage a paperless approach to enable a fast and an efficient fuel reimbursement programme for employees.