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All-in-one HR platform · v2.0
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All-in-one HR platform · v2.0
14-day free trial · No credit cardhello@HrMagix.com
Payment towards an employee's cost of moving for the job: travel, packing and shifting, and temporary accommodation. Where it reimburses actual expenses on transfer it is treated differently for tax from a fixed amount paid as salary, and it is often subject to a clawback clause.
Relocation allowance is decided at offer stage for candidates moving cities, and HR records the amount, what it covers and any clawback condition in the offer letter. Payment is usually made in the first or second salary, or as a reimbursement against bills.
Example: a new joiner gets ₹75,000 for moving from Pune to Bengaluru, with a clause that the full amount is recovered if they leave within twelve months. Payroll needs this clause on file so the recovery is applied in the full and final settlement.
The common mistake is treating the whole allowance as tax-free. Certain actual transfer costs may be exempt, while lump sums paid without bills are generally taxable salary. Confirm the current tax treatment before setting up the pay component.
Travel for the employee and family, moving household goods, temporary accommodation and sometimes a lump sum for setting-up costs. The policy should say which items are reimbursed and which are paid as a fixed amount.
A fixed lump sum is generally taxed as salary, while reimbursement of actual moving costs against bills may be treated differently. Confirm the current treatment before setting up the payroll head.
Practice varies. Many employers treat it as a one-time cost outside CTC, but it should be stated clearly in the offer or transfer letter.
Yes, if a written clawback clause provides for it, usually pro-rated over a period such as a year and adjusted in the full and final settlement.
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