Company used car transfered to the Director.

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This discussion addresses the possibility of a company transferring a used car to its director. It clarifies that if the director is a managing or whole-time director with an employment agreement, the transfer might be treated as a taxable perquisite. Otherwise, the profit on the sale is likely considered a short-term capital gain for the company.

Rahul

Rahul (Querist)
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18 May 2020 Dear Sir/Mam

ABC ltd. a company want to transfer its used car to the director of company whether it is possible?
The WDV of car is Rs. 5 lakh.
If Yes what will be the tax liability in the hands of company as well as in hands of director?

Soumitra Basu

Soumitra Basu (Expert)
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19 May 2020 The sale of the Car will be treated as Short Term Capital Gain in hands of the Company.

c.bakshi

c.bakshi (Expert)
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19 May 2020 if the director is managing director or whole time director and there is an express agreement of employment between the company and the director then it is taxable perq otherwise the profit on the transfer of car will be treated as short term capital gain.

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