TAX TREATMENT

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bhatia

bhatia (Querist)

19 December 2009 Pls guide me on the tax treatment of car which is the part of your CTC.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)

19 December 2009 Conditions of Car Perquisites

A) Where Car is owned by the Employee

Use of Personal Purpose

NIL

Use of Official Purpose

NIL*

Partly for Official /
Partly for Personal

Actual expenditure incurred by the employer
Less : Sum Calcuated @ Rs.1,200/-Per Month if cubic capacity 1.6 Ltrs.
Less : For Driver Rs.600/- Per Month
Less : Amount recovered from employee
Balancing amount is car perquisites taxable
( Log book to be maintained and to be certify by the employer)

B) Where Car is owned by the Employer /
Arranged by the Employer

All Expenses of the Employer
Add : 10% of the Actual Cost
Less : Recovery
Balancing amount is car perquisites taxable

NIL*

Sum Calcuated @ Rs.1,200/-Per Month if cubic capacity 1.6 Ltrs.
For Driver Rs.600/- Per Month
( Not necessary to maintanied the log book)

* Conditions to be satisfied if the Car is used for official purpose :-

1. The employer has maintained complete details of journey undertaken for offcial purpose which may include
date of journey, destination, mileage, and the amount of exepnditure incurred thereon.

2. The employer gives a certificate to the effect that the expenditure was incurred wholly and exclusively for
the performance of official duties

Note : 1. The priciple of Arms length price will apply while cars taken from related parties.
2. If more than on car is provided, one car would be traeted as for personal purposes.
3. Car facility between office and residence - not treated as amenity / benefit and
accordingly not a perquisites.
4. Content of log book - complete details of the journey such as date of journey .
destination, mileage and amount of the expenditure incurred.