Motor car owned by Employee but Expenses Reimbursed by Employer   - Taxability of Perquisites

 

*Small Car:-Upto 1600 cc (or 1.6 litres)

**Large car :->1600 cc or (>1.6litre)

 

 

Q1

Employee gets Basic Salary of 50000 pm. He owns a car

The company pays following expenses for car during year

Driver Salary p.a 60000
Diesel 40000
Maintenance Exp 30000
 TOTAL 130000

What is amt taxable is Car used for

  1. Official purpose
  2. Personal Purpose
  3. Partly Official Partially personal purpose

 

OFFICIAL PURPOSE

--answer--

Basic Salary 600000
(50000*12)  
   
Motor Car Perquisite 0
(fully exempt)  
INCOME FROM SALARY 600000

​Note:-In this case,Register to be maintained+ Certificate requred from employer


 

PERSONAL PURPOSE

--answer--

Basic Salary   600000
(50000*12)    
     
Motor Car Perquisite    
Amt Paid by Co    
Diesel 40000  
Maintenance Exp 30000  
Driver Salary 60000  
    130000
     
INCOME FROM SALARY   730000


 --endanswer--

PARTLY OFFICIAL PARTLY PERSONAL

--answer--

Both Official and Personal Purpose
     
Basic Salary   600000
(50000*12)    
     
Motor Car Perquisite    
Amt paid by  Company 130000  
     
Less    
Car+ Expenses -21600  
1800*12    
Driver Salary -10800  
(900*12)    
Motor Car perquisite   97600
     
INCOME FROM SALARY   697600

 

​--endanswer--

------------------------------------------------------------------------------------------

Note:-

If any amt claimed from employee,It will be reduced while calculating taxable perquisite  

 

Q2

Suppose in Q1,Company deducts Rs 2000 pm for Car provided

OFFICIAL PURPOSE

--answer-- 

Basic Salary 600000
(50000*12)  
   
Motor Car Perquisite 0
(fully exempt)  
INCOME FROM SALARY 600000

​Note:-In this case,Register to be maintained+ Certificate requred from employer


 

PERSONAL PURPOSE

View

PARTLY OFFICIAL PARTLY PERSONAL

--answer--​

Basic Salary   600000
(50000*12)    
     
Motor Car Perquisite    
Amt paid by  Company 130000  
Less    
Car+ Expenses -21600  
1800*12    
Add    
Driver Salary -10800  
(900*12)    
NET AMT 86800  
Less    
Amt recovered from employee(2000*12) -24000  
Motor Car perquisite   97600
     
INCOME FROM SALARY   697600

 --endanswer-- 

 

  1. Income Tax
  2. Income from Salaries
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Davneet Singh
Davneet Singh is a graduate from Indian Institute of Technology, Kanpur. He has been teaching from the past 8 years. He provides courses for Maths and Science at Teachoo. You can check his NCERT Solutions from Class 6 to 12.