Name: Flexible employee benefits
Brand: Pazcare
Rating: 4.8 (87 reviews)

What is petrol allowance for employees?

Fuel allowance or petrol allowance in salary is one of the components of flexible benefits provided by employers to their employees.

It covers the expenses incurred on fuel for official purposes. Employers give a fixed amount that employees can use towards their fuel expenses.

It is essentially an allowance given to employees who use their personal vehicles for work-related travel.

What is car allowance exemption?

A car allowance is a fixed monthly or annual amount paid by employers to employees to cover car-related costs like fuel, maintenance, insurance, and depreciation when employees use their personal vehicles for work purposes.

What is petrol allowance (fuel allowance or car allowance)?

Petrol allowance (fuel allowance) is a monthly benefit employers give to cover an employee’s fuel expenses. In India, it can be structured as part of salary. Exemption under Income Tax is allowed only if the allowance is used exclusively for official duties and supported by bills.

Want to go beyond allowances? Protect your team with group health insurance.

Fuel allowance tax exemption as per new tax-regime - how much is exempted?

The fuel allowance received by employees is subject to certain tax exemptions under section 10. The government has set a maximum limit of ₹ 7000 per month.

It means for an employee who has a taxable salary, ₹7000 of the monthly salary is non-taxable if the employer chooses to offer fuel allowance.

Engine capacity	Amount fixed by the government for tax exemption
More than 1600	₹7000/month
Upto 1600 CC	₹5000/month
2 wheeler	₹900/month

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Petrol allowance calculation - how to do it?

The upper limit allowance for petrol/fuel is fixed by the government as ₹7000 per month for all employees with taxable income. Therefore, you don’t have to calculate fuel allowance.

Engine capacity	Fuel allowance - Annually (₹)	Tax Savings/Annum (₹)
Engine capacity	Fuel allowance - Annually (₹)	Slab-1 (5%)	Slab-2 (20%)	Slab-3 (30%)
More than 1600	84,000	4220	16,880	25,320
Upto 1600 CC	60,000	3000	12,000	18,000
2 wheeler	10,800	540	2,160	3,240

How we simplify providing fuel allowance on your behalf?

💳 Employees get Pazcard and activate it by doing their KYC

💰 When payroll is processed monthly, the fuel wallet in Pazcard gets topped up

⛽️ Employees can use Pazcard at all petrol bunks/fuel stations across India

How easy is managing fuel allowance with us?

No bills; no manual checks

HRs don’t have to collect bills from employees for fuel transactions and validate them.

Pazcard integrates with your HRMS

Automate endorsements - employees joining, leaving, and appraised to taxable income.

Download reports from the dashboard

Real-time reports on the utilization of fuel wallet for any period.

Pazcard fuel allowances - How we impact your employees

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Open network across India

We offer an open network for employees to use Pazcard at any gas station

Full visibility via Pazcare app

Check credited money in different wallets, and access card details and all transactions made

Pazcard in employees’ control

Set pin, lock the card, enable tap to pay, set transaction limit, etc. on the app

30-minute TAT for query resolution

Employees can raise queries with screenshots within the app and we will resolve them in 30 minutes

Trust in our

Compliance & Certification

when it comes to your data security and privacy.

AICPA SOC 2 certified

ISO 27001 certified

When we wanted to give more employee benefits, Pazcard was the answer to our needs.
Their competitive pricing and diverse benefits - from food, fuel, telecom, to gifts wallets elevated our employee perks. What sealed the deal was their flexible, supportive team. Now we’re offering more and better, without breaking the bank.

Umang Mehta
Sr Operations Manager

When I founded Wint Wealth, I knew our employees deserved the best. So we adopted both Pazcare’s insurance and their innovative Pazcard.

With Pazcard my employees are now able to save taxes on their food and fuel expenses. Whether ordering food online or buying groceries at supermarkets our employees use Pazcard on a daily basis.

Ajinkya Kulkarni
CEO & Co-Founder

Frequently asked questions on fuel allowance

Have questions? We are here to help

Is petrol allowance taxable?

No. When structured as a salary component through a Flexible Benefits Plan (like Pazcard), petrol allowance is not taxable. Employees can save up to ₹25,000/year in taxes on fuel benefits alone.

How to claim fuel allowance?

If your company offers fuel allowance via Pazcare, you can just use Pazcard to claim fuel allowance at any petrol bunk. You can swipe or tap to pay with Pazcard.

Is fuel allowance taxable?

When fuel allowance is structured as part of a Flexible Benefits Plan (like Pazcard), it becomes tax-efficient. This can help employees save up to ₹25,000 annually on fuel expenses.

How much fuel allowance is tax-free?

Fuel allowance can be partially tax-free depending on how it is structured in your salary and the type of vehicle used.

Tax-free limits (as per new tax- regime rules):

Up to ₹7,000 per month for cars with engine capacity above 1600cc
Up to ₹5,000 per month for cars with engine capacity up to 1600cc
Up to ₹900 per month for two-wheelers

Is car allowance exempt from tax?

Yes, car allowance for official duty is exempt. If partly used for personal reasons, only the official-use portion is exempt.

Can employees claim both fuel and car allowance exemptions?

Yes, if structured by the employer and documented properly, both can be exempt when used strictly for official duties.

Fuel Allowance for Employees to save tax.