Car provided to employee

Hi...in your case FBT is applicable. If company pays FBT then there is no need to caluclate perquisites

If the car is transfered by the employer to the employee, the value of the car (actual cost) reduced by depreciation @ 20% for every completed year and further reduced by the amount received from the employee.........is the value of perquisite.

............If the car is provided by the employer only for use and repairs, running expenses and maintenance charges of such car is paid by the employer, then such expenditure is Fringe benefit and the company is liable for such FBT.

.........Rule - 3(7)(viii) - provides for such perquisite on transfer of motor car.

Dear Parthasarathy. You may be wrong..please find herewith questionaair no 81 which is circulated by the IT department under Circular No 8/2005. "81. Whether employees will be liable to income tax on the perquisite value of motor car provided by the employer in terms of rule 3(7)(vii) of the Income tax Rules relating to use of movable asset. Ans. Since expenditure on running and maintenance of motor cars is liable to FBT, the employees will not be liable to income tax on the perquisite value of motor car provided by the employer in terms of rule 3(7)(vii) of the Income tax Rules relating to use of movable asset."

Thank You

If an employer sells a used company car to his employee at the time of seperation, does it calls for VAT to be applicable and chargeable to the employee at the selling price.