Motor car (aka company car) offered as an employment benefit (perquisite) is common only in top level management these days. Learn how taxability in various scenarios like who owns the vehicle.
This document covers
The term perquisite is an inclusive one. There are various perquisites provided by an employer to employee during the course of employment. The value of the perquisites is also taxable in the hands of employee. The employee is required to pay tax only on those perquisites which he enjoys. Motor Car is also one type of perquisite provided by the employer to an employee. Generally, this type of perquisite is provided to top level employees.
When the employer has provided the motor car to employee during the course of employment, the value of perquisite is computed in three scenarios based on who owns and who uses
|Reimbursement of Expenses||Cubic Capacity of engine does not exceed 1.6 litres||Cubic Capacity of engine exceeds 1.6 litres|
|If reimbursed by employer||1800 per month (plus Rs 900 if chauffer is also provided)||2400 per month (plus Rs 900 if chauffer is also provided)|
|If not reimbursed by employer||600 per month (plus Rs 900 if chauffer is also provided)||900 per month (plus Rs 900 if chauffer is also provided)|
If the employer or employee claims that the motor vehicle is exclusively used for official purposes or the actual expenses on the running and maintenance of the motor car is more than the above limits, he can claim higher amount provided that he has maintained following documentation
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