FBT - Car owned by employee's spouse

If an employee uses a car registered under his/her spouse's name but gives a declaration stating that the car is being used by the employee and not the spouse, can the employer give the employee part of his salary as benefits like fuel allowance, driver allowance, etc. and pay FBT for that instead of the employee paying IT for the same if he got them as salary? (Obviously the employer would cut the FBT from the employee's salary, but thats a different topic)

Kindly clarify.

Replies (9)

See Shankar, IT Act understands physical ownership and not the actual ownership. Thus employee is eligible for abovementioned benifits.

Even You can claim Depreciation on a car not legally owned by you but physicall you are using it for your business/profession.

Hope this will clarify

Thanks for the reply. But the finance head in my company differs from this. He says our auditor (Enrst&Young) has clearly said that this cannot be done and the vehicle has to be registered in the employee's name since the company is paying FBT for the car expenses and the car expenses will show up in company accounts as their own expenditure.

Dear Shankar,

I am fully agree with the opinion of CA Abhinav and you are eligible to avail the benefit of the car which is owned by your spouse.

Thanks, Laxmikant.

Can one of you provide me with an Income Tax Rule or some other fineprint that supports this fact which I can show to the finance head of my company as proof?

Thanks in advance.

It would be great if someone can help me soon because many of us in our company are losing out tens of thousands in IT because of this.

Just bumping the thread, hoping for some help soon from one of you.

Can one of you provide me with an Income Tax Rule or some other fineprint that supports this fact which I can quote to the finance head of my company as proof?

Kindly help.

 

Mr. Shankar,

Tax authorities will go as per records available, As Ernst & Young mentioned rightly that not possible.

 

 

 

For HRA, IT Dept considers husband and wife as a non-commercial relationship who cannot pay rent to each other. They are supposed to share their house.

Doesn't the same logic apply for car also?

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