@akhil the convention in question is the XDG Base Directory spec:
https://specifications.freedesktop.org/basedir-spec/basedir-spec-latest.html
It does not specify `~/.var`; instead, as I understood, `$XDG_DATA_HOME/flatpak` should be used; and if `$XDG_DATA_HOME` is not set, `~/.local/share` should be taken as its value.
Sadly, almost nobody does that properly anyway. Even when people try to do it the right way, they most often just hard-code `~/.local/share/whatever`, without taking that env var into account.