Difference in taxation of company leased car

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This discussion explores the differences in tax benefits for employees using company-leased cars under the old and new tax regimes. While initial advice suggests no difference in how lease rentals and personal use perquisites are taxed, further questions arise. Some sources indicate the new regime might treat car lease components, including fuel, maintenance, and driver salary, as fully taxable perquisites, unlike the old regime where only certain elements were taxed. The consensus leans towards the tax treatment being similar, but clarification is sought on specific documentation and potential nuances.

Rajesh Chandran

Rajesh Chandran (Querist)

09 April 2025 Between old and new tax regime, are there any differences in tax benefits for employee incase he uses company lease car. Car belongs to company and is leased to employee for 3 years. Car lease is less than 50k per month.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

11 April 2025 The monthly lease rental paid by the company is not considered a taxable perquisite in your hands.
Secondly, the perquisite value for personal use of the car is also the same under both regimes.
So, in general, there doesn't seem any difference in both the tax regime.

Rajesh Chandran

Rajesh Chandran (Querist)

12 April 2025 Thank you Shri. Dhirajlal Ji. Appreciate.

If i understand you correctly, you think that tax benefit on car lease won't reduce if I shift to new tax regime.

However, I heard from multiple sources that in new tax regime, car lease amount paid by company after deduction from my salary, maintenance, fuel, chauffer salary reimbursement to me is fully considered as taxable prerequisite.

While in old tax regime, tax prerequisite is only Rs.1600 per month for fuel plus maintenance and 900 pm for driver salary and lease amount is fully non taxable.

Which document should I read to understand this myself pls ?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

12 April 2025 If the car is only used for company's work, it will not be taxable to you, as it is not considered as perquisites. But if it is used for personal purpose, it will be added to your salary income, which will be taxable in both the regime equivalently. Considering slab rate, new regime would be more beneficial.

Rajesh Chandran

Rajesh Chandran (Querist)

12 April 2025 Is there any document I can refer for details pls
Where are these tax rules written ?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

12 April 2025 1. https://cleartax.in/s/tax-benefit-salaried-employee-car-provided-employer

2. https://incometaxmanagement.in/perquisites-valuation-of-motor-car-other-vehicles-rule-32/

3. https://incometaxindia.gov.in/Pages/tools/motor-car-facility.aspx

Rajesh Chandran

Rajesh Chandran (Querist)

12 April 2025 Thanks a lot. Thing is nowwhere it is mentioned how NTR treats car lease. So I think treatment must be same then.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

12 April 2025 Good Luck...

Rajesh Chandran

Rajesh Chandran (Querist)

12 April 2025 Thanks a lot Shri. Dhirajlalji. Appreciate you taking time to explain.

As I understood, there is no difference in treatment of both below components of the car lease.
a. Car Lease and insurance - same tax benefit in old and new
b. Car fuel, maintenance, chauffer salary - same tax benefit in old and new

But there is still some doubt in my mind because many other people have mentioned there is a difference in tax treatment, for example this thread, https://www.caclubindia.com/experts/company-car-lease-under-new-tax-regime--2895084.asp

Am I missing something ?

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