CAR LEASE

This query is : Resolved

Sindhu (Querist)
Follow

06 March 2008 Dear Sir,

In this case the lease payments are made towards the car under operating lease scheme
The steps followed for the same by the company are:
1. Request for the car placed by the employee.
2. The authorized person approves for the same and the car is taken from Sundaram Finance on Operating Lease.
3. The amount paid towards the same is deducted from the concerned employees’ CTC
4. Treatment of the same transactions in the company:

As operating expenses for the company.
The company is paying FBT on the same.

However the same is nowhere reflected in the salary of the employee.

Doubts:

Since the amount is deducted from the CTC shouldn’t it form a part of salary???

If so the TDS liability on salary of this amount would come into picture.

Please clarify if FBT is applicable or TDS?????

MANAS ROUT

MANAS ROUT (Expert)
Follow

06 March 2008 PLEASE CLEARIFY YOUR QUESTION WHETHER YOU HAVE PAID THE AMOUNT ON BEHALE OF THE EMPLOYEE AS A LOAN OR GIFT OR IN ANY OTHER MANNER??
POSITION OF THE EMPLOYEE WHETHER SPECIFIED OR NOT.
PLS EXPLAIN CLEARLY....

CA Saurabh Maheshwari

CA Saurabh Maheshwari (Expert)
Follow

07 March 2008 PLEASE CLARIFY

R.V.RAO

R.V.RAO (Expert)
Follow

07 March 2008 I BELIEVE ONLY MONTHLY LEASE CHARGES PAID BY THE COMPANY TO SUNDARAM FINANCE ARE DEDUCTED FROM MONTHLY SALRY OF EMPLOYEE EACH MONTH. (SINCE YOU CANNOT DEDUCT TOTAL COST OF CAR IN A SINGLE MONTH CTC. IT IS A LOAN TO EMPLOYEE.EVEN OTHERWISE IT IS TREATED AS A LOAN )
SUCH PAYMENT ON BEHALF OF THE EMPLOYEE BEING A FRINGE BENEFIT, THE EMPLOYER IS LIABLE FOR FBT WHICH THE COMPANY IS PAYING.
IF YOU DEDUCT EVERY MONTH FROM EMPLOYEE'S SALARY, EITHER THE MONTHLY LEASE INSTALMENT OR PARTPAYMENT OF LOAN EACH MONTH, THE NECESSARY TREATMENT GETS REFLECTED IN PAY ROLL/ EMPLOYEE'S SALARY AND ALSO COMPANY ACCOUNTS.
LEASE CHARGES DR
SALARY CR
TDS CR
OR IF LOAN ACCOUNT IS CERDITED EARLIER
LEASE CHARGES DR
LOAN ACCOUNT CR
TDS CR
R.V.RAO

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