Conveyance allowance not a part of wages to compute ESI contribution

The Hon’ble Supreme Court has passed an Order recently (ESIC v/s Texmo Industries (Madras) dated 08 March 2021) stating that conveyance allowance or traveling allowance does not fall under the definition of ESI wages. This has been affirmed as a reported judgment by the Apex Court.

So far, following the judgment passed by Hon’ble High Court of Karnataka, the conveyance allowance was considered as a part of wages and was being included for ESI contribution calculation and to arrive at salary ceiling of Rs. 21,000 per month.

Going forward, the employers have to exempt conveyance allowance from ESI contributions and for computing the ceiling limit of Rs. 21,000 per month.

However, this is subject to further appeal of EPFO before the Apex Court if any.

The highlighted points in this reported judgment copy is shared here below.

Related Acts
  • ESI Act

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