Transfer of company asset to the director

Save Share

This query is : Resolved

Quick Summary

A company can transfer a used car to its director. If transferred for free, the income tax will be based on the car's book value, treated as part of the director's remuneration. If the director is a managing or whole-time director with an employment agreement, the car's value is taxable as a perquisite. Otherwise, the profit on transfer is considered a short-term capital gain, with no direct tax liability for the director.

Rahul

Rahul (Querist)
Follow

18 May 2020 Hi

Can a Company transfer its used car to the Director, if yes then what is the related income tax provision?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
Follow

18 May 2020 Yes, it can be transferred. If transferred at free of cost income tax applicable on book value of car considering it as part of remuneration paid to Director.

Rahul

Rahul (Querist)
Follow

18 May 2020 Thanks Sir
it means a company can transfer its used car to the director at free of cost.
Sir one more question suppose the WDV of car is Rs. 6 Lakh so now what will be the tax liability for both in the hands of company and director.

c.bakshi

c.bakshi (Expert)
Follow

19 May 2020 if the director is managing director or whole time director and there is an express agreement of employment between the company and the director then it is taxable perq otherwise the profit on the transfer of car will be treated as short term capital gain. no liability is in the hand of director

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now