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Valuation of Pequisites for Car Lease

Shekhar (Sr. Executive) (53 Points)

12 January 2010

Please clarify the below query:

if an employees receives the Car Lease (car engine cubic capacity is beyond 1.6 litres) amount of Rs.40k per month including maintenance charges (Rs.30k car lease amount + Rs.10k car maintenance).
Please let me know the value of perquisite,
whether the perqs value is Rs.2400/- per month only or more. Please clarify.

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14 Replies

Amir (Learner) (4016 Points)
Replied 12 January 2010

Dear Sekhar,

Do you mean that employee has given his car on lease to the employer???...Further, the car is used by the same employee or some other...

Shekhar (Sr. Executive) (53 Points)
Replied 12 January 2010

Dear Amir,

Yes, car provided by employer (the car on lease) to an employee and car is used by same employee,

Amir (Learner) (4016 Points)
Replied 12 January 2010

Dear Shekhar,

1) If car is used completely for personal purposes then Rs. 40,000/month will be taxable

2) If car is used for partly official & partly personal purposes -

>>>>>>>>>>>>>>>>Rs. 40,000 - Rs. 2,400 i:e Rs. 37,600/month will be taxable..Furthet Rs. 900/month will be deducted if driver has also been provided..

3) If EXCLUSIVELY FOR OFFICIAL PURPOSES - NOTHING WILL BE TAXABLE...

Shekhar (Sr. Executive) (53 Points)
Replied 12 January 2010

Dear Amir,

Thanks a lot your reply. Its partly personal and partly official purposes.

Please perceive on the attached file, its shows the value of perquisites is Rs.2400/-. my query is wether the value of perquisites is :

Method 1: Rs. 2400/- per month > value of perquisite or

Method 2 : Rs. 40,000 - Rs.2,400 = Rs. 37,600 > Value of perquisite

Which is correct, as per attached file : only Rs. 2400/- would be the value of perq/taxable amount. can you please look at this and solve this.

Attached File : 56 new perqs.pdf downloaded: 257 times

Amir (Learner) (4016 Points)
Replied 12 January 2010

Dear Shekhar,

The valuation will be Rs. 2,400 in case the CAR IS OWNED BY THE EMPLOYER....BUT IN UR CASE CAR IS OWNED BY THE EMPLOYEE....

Shekhar (Sr. Executive) (53 Points)
Replied 12 January 2010

Dear Amir,

The car is in lease period and the asset/car is not yet transferred to employee's name, shall we need to consider the the employee is owner ? I think, the ownership will transfer to employee after the completion of lease period. Pls correct if I am wrong.

Amir (Learner) (4016 Points)
Replied 12 January 2010

Dear Shekhar,

Earlier when i asked u that do u mean employee has given his car on lease to his Emploer, u said "Yes" & now u r saying that Employee is not the owner...

Pls clearify the facts brother...

Shekhar (Sr. Executive) (53 Points)
Replied 12 January 2010

Dear Amir,

The car provided to employee for usage, but the ownership is not transferred to employee.

The car is purchased on lease plan/finance, so the car is not in the name of employee untill the completion of lease period. after the payment of full car lease then company will tranfer the owenership to employee and stop paying car lease amount of Rs.30,000/- per month.

Amir (Learner) (4016 Points)
Replied 12 January 2010

Dear Shekhar,

Who has taken the lease frrom the leasing company??, Company or Employee..

Shekhar (Sr. Executive) (53 Points)
Replied 12 January 2010

Dear Amir,

The employer has taken the lease in company name/employer from leasing company, and shows in the books of account of company/employer (as assets) and after the completion of lease the car ownership will transfer to employee name, while transfers to employees will book as sale of car.

Aravind.. (CA) (1262 Points)
Replied 13 January 2010

transfer of movable assets is a perquisite and it is chargeable....

chargeable area= actual cost of asset-50% depreciation on wdv method for the car being used-any amount recovered from employee

i think this will be correct if the motor car is transferred after some period.

till the car is not transferable , amir has explained above....

Shekhar (Sr. Executive) (53 Points)
Replied 13 January 2010

Thanks Aravind and Amir.

Intel_Inside (SQE) (26 Points)
Replied 14 January 2010

Hi,

I recieved notice regarding this new tax perquisite for Car lease. Can you help me in understanding it better.

Car is in the name of employer and every month approx 9k amount is given as EMI plus 2600 fuel is reimbursed.

ajay (AM) (22 Points)
Replied 17 January 2010

Dear Amir

comapny provides me car lease 10000/- . I am using car for private & official purpose. please let me value of perqusite. please note this car lease between my comapny & other car hire ageny.