Can the EMI (principle + int) paid towards Company leased Car loan be considered as non-taxable income?
For example: Company provides loans to employee to buy a car and recovers the amount through EMI. Car will be in company’s name till employee clears the loan. In such cases can the EMI paid be considered as non-taxable income?
Hi
In this case it is taxable in the hands of employees at three stages:
1) Car is in the name of company: The car provided by employers is taxable as perquisites in the hands of employees. Perquisite value is added to employee’s salary as per the usage, car size etc, there are different treatments for different situations.
2) Loan provided to employees: In this case also, perks value for interest free/confessional loan would be added to employee’s salary income.
3) Transfer of Car at end of term: Perks value for transfer of car would be added to employee’s salary income as per income tax provision.
So in your case there is no question of non-taxability but employees would be taxed at all three stages.
I have not seen such arrangement in any company. Generally EMI is being adjusted from employee’s CTC and no loan/deduction is shown on paper, in this case no perk value is added as mentioned in point ( 2 ).
if the company provide the car and deduct emi from the employees Salary(deduction Not mention in CTC) than how the company adjust the emi deduction in their books of Account even they are already taking the emi benefits as expense.
so if the company taking the emi return from their employees and showing the Emi payment as expense then what is the treatment on the same.
Please suggest.
CAclubindia
