Dear Friends and Experts,
Kindly give me your valuable view for the below
We are reimbursing the expenditure to our Senior Management associates in order to give tax relief to an extent pertains to their own Vehicle as per our company policy. In this regard, we are paying an amount of Rs. 5000/- towards Petrol + 8000/- towards Chauffeur Salary+Maiteance expenses on monthly basis upon submission of Bills. Once we paid the amount to respective associates, we are booking these expenses under Vehicle Maintenance A/c in our Books of accounts. Afterwards, we are adding the below mentioned amounts to their total income in order to find out their tax liability against these privileges under perquisites.
Rs.1600 for Car 1.6 L & Rs.2400/- for 2.4L and Rs.900/- towards Driver Salary. Moreover, we are not giving Rs.800/- as deduction U/s 10. Hence, I request you all kindly guide me whether the same practice is correct in accordance to Income Tax norms. As we would like to give tax benefits to our Top management we are doing the same practice as they are falling in 30% bracket. Hence, kindly give your valuable inputs and views for the same.
Your kind support in this regard would be greatly appreciated.
Anticipating an early reply for the same.
Thank in advance,
Kumar
CAclubindia
