Vehicle maintenance

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smitha rajesh (Querist)

15 September 2017 sir i have a doubt regarding vehicle maintenance relating to a vehicle owned by the company but it is used by ex-employee now worked as a consultant in the same company. is it allowed as company's expense or it become charged as remuneration in kind to the consultant?

Samir Ranjan Mohanty

Samir Ranjan Mohanty (Expert)

15 September 2017 Vehicle is owned by Company.So all the repair & maintenance expenses must be in the name of Company. If the Consultant is reimbursed any of the expenses bill relating to vehicle, then it is pertinent to go through the consultancy agreement. If in that agreement, it is mentioned to reimburse the expenses, then i think no issue .In that case ,company will book as expenses in its books. Then in the hands of consultant, it will be part of his consultancy income as reimbursement of out of pocket expenses.

Samir Ranjan Mohanty

Samir Ranjan Mohanty (Expert)

15 September 2017 An Ex-employee can become Consultant.There is no restriction as such.In case of consultant , there must some service agreement as well as benefits available to them like consultancy fee,other benefits like petrol & diesel bill (Related to official assignments) & others. Difference between employee and consultant is that retirement benefits,Provident fund,Gratuity,leave encashment & others not applicable to Consultants.Answer to your question is that Company can book expenses if service agreement allows.If service agreement does not allow and it is in nature of business expenditure and as per authorization matrix, it is approved, Then one can straight away book as business expenses.

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