Income tax

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Querist : Anonymous

Querist : Anonymous (Querist)

14 August 2011 plz explain provision for valuation of perquisites in respect of motor car relevant to may,2012 exam for ca-ipcc.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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21 August 2011 Sl. No. Circumstances Where cubic capacity 8/L3of engine does not exceed 1.6 litres Where cubic capacity of engine exceeds 1.6 litres
(1) (2) (3) (4)
(1) Where the motor car is owned or hired by the employer and—(a) is used wholly and exclusively in the performance of his official duties;
(b) is used exclusively for the private or personal purposes of the employee or any member of his household and the running and maintenance expenses are met or reimbursed by the employer; No value:
Provided that the documents specified in clause (B) of this sub-rule are maintained by the employer.
Actual amount of expenditure incurred by the employer on die running and maintenance of motor car during the relevant previous year including remuneration, if any, paid by the employer to the chauffeur as increased by the amount representing normal wear and tear of the motor car and asreduced by any amount charged from the employee for such use. No value:
Provided that the documents specified in clause (B) of this sub-rule are maintained by the employer.
Actual amount of expenditure incurred by the employer on the running and maintenance of motor car during the relevant previous year including remuneration, if any, paid by the employer to the chauffeur as increased by the amount representing normal wear and tear of the motor car and asreduced by any amount charged from the employee for such use.
(c) is used partly in the performance of duties and partly for private or personal purposes of his own or any member of his household and(i) the expenses on maintenance and running are met or reimbursed by the employer,
(ii) the expenses on running and maintenance for such private or personal use are fully met by the assessee. Rs. 1,200 (plus Rs. 600, if chauffeur is also provided to run the motor car)
Rs. 400 (plus Rs. 600, if chauffeur is provided by the employer to run the motor car) Rs. 1,600 (plus Rs. 600, if chauffeur is also provided to run the motor car)
Rs. 600 (plus Rs. 600, if chauffeur is also provided to run the motor car)
(2)(3) Where the employee owns a motor car but the actual running and maintenance charges (including remuneration of the chauffeur, if any) are met or reimbursed to him by the employer and(i) such re-imbursement is for the use of the vehicle wholly and exclusively for official purposes,
(ii) such re-imbursement is for the use of the vehicle partly for official purposes and partly for personal or private purposes of theemployee or any member of his household.
Where the employee owns any other automotive conveyance but the actual running and maintenance charges are met or reimbursed to him by the employer and
(i) such re-imbursement is for the use of the vehicle wholly and exclusively for official purposes,
(ii) such re-imbursement is for the use of the vehicle partly for official purposes and partly for personal or private purposes of theemployee. No value:
Provided that the documents specified in clause (B) of this sub-rule are maintained by the employer.
Subject to the provisions of clause (B) of this sub-rule, the actual amount of expenditure incurred by the employer as reduced by the amount specified in Sl. No. (1)(c)(i) above.
No value:
Provided that the documents specified in clause (B) of this sub-rule are maintained by the employer.
Subject to the provisions of clause (B) of this sub-rule, the actual amount of expenditure incurred by the employer as reduced by an amount of Rs. 600: No value:
Provided that the documents specified in clause (B) of this sub-rule are maintained by the employer.
Subject to the provisions contained in clause (B) of this sub-rule, the actual amount of expenditure incurred by the employer asreduced by the amount specified in Sl. No. (1)(c)(i) above.
Not applicable
Provided that where one or more motor-cars are owned or hired by the employer and the employee or any member of his household are allowed the use of such motor-car or all or any of such motor-cars (otherwise than wholly and exclusively in the performance of his duties), the value of perquisite shall be the amount calculated in respect of one car in accordance with Sl. No. (l)(c)( i) of Table II as if the employee had been provided one motor-car for use partly in the performance of his duties and partly for his private or personal purposes and the amount calculated in respect of the other car or cars in accordance with Sl. No. (1)(b) of Table II as if he had been provided with such car or cars exclusively for his private or personal purposes.
(B) Where the employer or the employee claims that the motor-car is used wholly and exclusively in the performance of official duty or that the actual expenses on the running and maintenance of the motor-car owned by the employee for official purposes is more than the amounts deductible in Sl. Nos. 2( ii) or 3(iii) of Table II, he may claim a higher amount attributable to such official use and the value of perquisite in such a case shall be the actual amount of charges met or reimbursed by the employer as reduced by such higher amount attributable to official use of the vehicle provided that the following conditions are fulfilled:—
(a) the employer has maintained complete details of journey undertaken for official purpose which may include date of journey, destination, mileage, and the amount of expenditure incurred thereon;
(b) the employer gives a certificate to the effect that the expenditure was incurred wholly and exclusively for the performance of official duties.
Explanation.—For the purposes of this sub-rule, the normal wear and tear of a motor-car shall be taken at 10% per annum of the actual cost of the motor-car or cars.”
(iii) after sub-rule (5), the following sub-rule shall be inserted with effect from 1st April, 2008, namely:-
“(6) The value of any benefit or amenity resulting from the provision by an employer, who is not liable to pay fringe benefit tax under Chapter XIIH of the Income-tax Act and is engaged in the carriage of passengers or goods to any employee or to any member of his household for personal or private journey free of cost or at concessional fare, in any conveyance owned, leased or made available by any other arrangement by such employer for the purpose of transport of passengers or goods shall be taken to be the value at which such benefit or amenity is offered by such employer to the public as reduced by the amount, if any, paid by or recovered from the employee for such benefit or amenity:
Provided that nothing contained in this sub-rule shall apply to the employees of an airline or the railways”

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