Income Tax Car Perk
Income Tax Car Perk
Income Tax Car Perk
B. Car is owned or hired by employer, provided to an employee for partly official and
partly personal purposes, and expenses for private purposes are incurred by
employee .
C. Car is owned by employee, expenses are incurred by employer and car is used for
partly official and partly personal purposes.
D. Any automotive conveyance (other than car) owned by employee and expenses are
incurred by employer.
xxxxxx
xxxxxx
(+) Driver
(if provided)
(=) taxable value
Rs. 2400 PM
Rs. 900 PM
(+) Driver
(if provided)
Rs. 900 PM
Rs. 3300 PM
Rs. 2700 PM
Rs. 1,800 per month (1600cc or less)/Rs. 2,400 per month (above 1600 cc)
for car is taxable.
If driver is provided, an additional sum at the rate of Rs. 900 per month
shall be taxable.
Expenditure recovered from the employee is not deductible
Situation 1 - Car is owned or hired by an employer, all expenses are incurred by employer
and provided to an employee only for official purposes:
Technically it is not a perquisite, as the concerned employee does not get any
personal benefit at the cost of employer. Consequently, nothing is chargeable to tax.
However, the Board has prescribed two conditions [narrated in para 44.14-1] which
are to be satisfied by the employer and only then nothing would be chargeable to tax.
Rs. 600 per month (1600cc or less)/Rs. 900 per month (above
1600 cc) for car is taxable.
Rs. 600 PM
(+) Driver
(if provided)
Rs. 900 PM
Rs. 900 PM
(+) Driver
(if provided)
Rs. 900 PM
Rs. 1800PM
XXXXX
Rs. 1800 PM
Taxable amount
Total expenditure
(-) Office Use
XXXXX
Rs. 2400 PM
xxxxx
xxxxx
Employee
xxxxx
Taxable amount
xxxxx
3. Conversely, if such conveyance is used by the employee partly for official and
partly for private purpose, then actual expenditure incurred by employer minus
expenditure pertaining to official use minus anything recovered from employee,
is taxable in the hands of employee.
4. Expenditure pertaining to official use can be calculated as per logbook of the
car ( if conditions narrated in para 44.14-1 are satisfied). Alternatively,
expenditure pertaining to official use can be calculated at the rate of Rs. 900 per
month.
Where the employer or the employee claims that the motor car is used wholly and
exclusively in the performance of official duty , the following two conditions should be
satisfied:
Condition 1 - The employer has maintained complete details of journey undertaken for
official purpose which may include date of journey, destination, mileage, and the
amount of expenditure incurred thereon.
Condition 2 - The employer gives a certificate to the effect that the expenditure was
incurred wholly and exclusively for the performance of official duties.
Conveyance facility to judges - Conveyance facility provided to high court / supreme court judges is
not chargeable to tax.
Conveyance facility to chairman / members of UPSC - Conveyance facility ( including transport
allowance ) provided to serving chairman / members of UPSC is not chargeable to tax.