Save Rs 588 on a 2-Year Ad-Free CAclubindia Pro Membership. Subscribe Now!

Car Hire charges

Save Share

This query is : Resolved

Kumar (Querist)

07 June 2010 To claim tax benefits, some of our employees are opting for Car hire charges. There is agreement between our company and car owner. This amount will be deducted from the employee salary and it will be paid to car owner after deducting the TDS. Is this correct way of doing? Any company follows this?

Please guide me.

Regards

Kumar.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)

07 June 2010 My view, Your practice is correct only, since the hiring between car owner and company the payment to be made to the car owner and it is for employees and can be reduced from salary if it is company policy

CA SANJAY MUKHERJEE

CA SANJAY MUKHERJEE (Expert)

07 June 2010 The car hire charges paid to contractor would be tax free in the hands of employees only if the said car is used for official purpose. Otherwise the full or part would be taxable perquisite as per valuation rules.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now