Income tax on selling a leased car to a 3rd party


(Querist)
26 June 2019
Hello Sir/Madam, I have a query related to Car leasing. In my company we have car lease policy, where employee can lease a car which is registered in the name of my organization. I pay EMI for the car and claim income tax exemption on the EMI being paid. After the completion of car lease, i have to pay 20% of residual value to finish the lease. Post that, i can sell car directly to anyone. Sale proceed will come to my bank account. What will be the income tax implication on the money received from the car sale. I am asking this question because it is different than the car sale. In this case, the car is not registered in my name but it is registered in my company's name. I have NOC from company to sell it after paying residual amount of 20%. Can you please help with this ? Thank you,



CA R SEETHARAMAN (Expert)


Click to Talk 26 June 2019
Any gain on sale will be taxable in your hand irrespective of it you own the car or not as you are the beneficiary.

Vinay Katiyar (Querist)
26 June 2019
Hi Sir,
thank you for your response. Can you explain how to calculate the gain here. I have paid all the EMI for 44 months and Residual value as well. Combining all amount it is more than the amount which i will receive from the sale of the car.

CA R SEETHARAMAN (Expert)


Click to Talk 26 June 2019
If the car is used for your personal use then it's exempted under personal effects.

Vinay Katiyar (Querist)
26 June 2019
Hi Sir,
It is used for both personol and official purposes.

Thank you,

CA R SEETHARAMAN (Expert)


Click to Talk 26 June 2019
Then also it's exempted.


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