Vehicle reimbursement

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Querist : Anonymous

Querist : Anonymous (Querist)

30 September 2014 hi i want to know insurance exp of vehicle comes under vehicle reimbursement or not.

Arun Jain

Arun Jain (Expert)

30 September 2014 If u are paying on behalf of employee than its vechile reimbursement otherwise its insurance expenses for company

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Querist : Anonymous

Querist : Anonymous (Querist)

02 October 2014 employee paying for their personal vehicle & claiming reimbursement for insurance of car/bike

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

03 August 2025 Thanks for the clarification. Your scenario is:
An employee pays insurance premium for their personal vehicle (car/bike) and claims reimbursement from the company.
You’re asking: Does this count as vehicle reimbursement?
✅ Answer: Yes, it is considered vehicle reimbursement, but with important conditions and implications.
🔍 Breakdown:
✅ If all these apply:
The vehicle is used for official/company purposes (e.g. travel for work),
The company policy allows reimbursement of vehicle expenses,
The insurance payment is claimed with proper supporting documents (receipt, policy copy),
➡️ Then it qualifies as vehicle reimbursement (specifically, reimbursement of running/maintenance cost, which includes insurance).
📘 Accounting Treatment:
Book it under:
"Vehicle Reimbursement – Employees" or "Staff Conveyance" (as per internal chart of accounts).
Do NOT treat it as a company asset or company insurance expense, since the vehicle is owned by the employee.
💰 Taxation Implication (for employer/employee):
For Employer:
Treated as employee benefit; allowed as business expense if supported by policy and documentation.
For Employee:
Taxability depends on usage:
If the vehicle is exclusively used for official duty, it's not taxable.
If there's personal + official use, a perquisite valuation may apply as per Rule 3 of Income Tax Rules.
📌 Summary:
Item Status
Insurance of personal vehicle reimbursed by employer ✅ Vehicle reimbursement
Can company claim as expense? ✅ Yes, if business use is justified
Is it taxable for employee? ❓ Depends on personal vs official use

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