tax on vehicle allowance
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
18 April 2010
my employer is providing me a car. I have to buy the car with a loan of Rs.5,50,000/- for which EMI will be reimbursed by the employer over the period of 5 years @ 12,500/- p.m. and also reimburse the petrol cost for 125 ltrs per month and maintenance expenses upto 40,000/-
I want to know whether the above allowances are taxable in my hand.
Thanks
I want to know whether the above allowances are taxable in my hand.
Thanks
19 April 2010
Please provide Over the period of time the Car owner is you or the employer ? and the expenses of Petrol & Maintenance is based on the purpose whehther personal,offical you mentioned the same
Querist : Anonymous
Querist :
Anonymous
(Querist)
24 April 2010
i will be the owner of the car. The car is meant for official use.
26 July 2025
Thanks for the details! Here’s how tax on your vehicle allowance will generally work in this scenario where **you own the car** but the employer reimburses EMIs, petrol, and maintenance expenses:
---
### 1. **EMI Reimbursement (Loan Repayment by Employer)**
* Since the car is in **your name**, the EMI reimbursements by the employer are considered a **perquisite (benefit)**.
* This amount is **taxable as salary income** in your hands.
* The entire amount of EMI reimbursed (₹12,500 per month) will be added to your salary for tax calculation.
### 2. **Petrol Cost Reimbursement (125 litres per month)**
* Reimbursement of petrol expenses is also treated as a **perquisite** and **taxable as salary income**.
* The amount reimbursed by your employer for petrol cost will be included in your taxable income.
* However, if the employer provides a fixed amount irrespective of actual petrol usage, that too will be taxable as perquisite.
### 3. **Maintenance Expenses up to ₹40,000**
* Maintenance expenses reimbursed by your employer are also considered a **perquisite and taxable**.
* This amount will be added to your salary income for tax purposes.
---
### **Summary of Tax Treatment**
| Reimbursement Type | Taxability | Basis of Taxation |
| -------------------- | --------------------------- | ---------------------------------------- |
| EMI Reimbursement | Fully taxable as perquisite | Entire reimbursed amount added to salary |
| Petrol Reimbursement | Fully taxable as perquisite | Amount reimbursed by employer |
| Maintenance Expenses | Fully taxable as perquisite | Amount reimbursed by employer |
---
### **Additional Notes:**
* If the employer had owned the car and provided you the car for official use, different valuation rules for taxable perquisite would apply (like standard valuation based on engine capacity, km run, etc.).
* Since you are the registered owner and the employer is reimbursing costs, these reimbursements are treated as taxable benefits.
* Keep all bills/invoices for petrol and maintenance expenses for records.
---
---
### 1. **EMI Reimbursement (Loan Repayment by Employer)**
* Since the car is in **your name**, the EMI reimbursements by the employer are considered a **perquisite (benefit)**.
* This amount is **taxable as salary income** in your hands.
* The entire amount of EMI reimbursed (₹12,500 per month) will be added to your salary for tax calculation.
### 2. **Petrol Cost Reimbursement (125 litres per month)**
* Reimbursement of petrol expenses is also treated as a **perquisite** and **taxable as salary income**.
* The amount reimbursed by your employer for petrol cost will be included in your taxable income.
* However, if the employer provides a fixed amount irrespective of actual petrol usage, that too will be taxable as perquisite.
### 3. **Maintenance Expenses up to ₹40,000**
* Maintenance expenses reimbursed by your employer are also considered a **perquisite and taxable**.
* This amount will be added to your salary income for tax purposes.
---
### **Summary of Tax Treatment**
| Reimbursement Type | Taxability | Basis of Taxation |
| -------------------- | --------------------------- | ---------------------------------------- |
| EMI Reimbursement | Fully taxable as perquisite | Entire reimbursed amount added to salary |
| Petrol Reimbursement | Fully taxable as perquisite | Amount reimbursed by employer |
| Maintenance Expenses | Fully taxable as perquisite | Amount reimbursed by employer |
---
### **Additional Notes:**
* If the employer had owned the car and provided you the car for official use, different valuation rules for taxable perquisite would apply (like standard valuation based on engine capacity, km run, etc.).
* Since you are the registered owner and the employer is reimbursing costs, these reimbursements are treated as taxable benefits.
* Keep all bills/invoices for petrol and maintenance expenses for records.
---
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