Ashish (Professional) (117 Points)
16 June 2008I am a professional and show various different type of expenses in ITR which occur. I have bought a new car through loan from bank.
Car is used for professional and personal purpose both. I want to know the interest I am paying on car loan, can be shown as a deduction in future ITR and take the benefit?
Please suggest.
CA. Atindra A. Prabhu Bhatikar
(practising CA)
(68 Points)
Replied 17 June 2008
Mr Ashish, u can definitely claim the expenses on car - depr, interest on loan, petrol and other maintenance expenses as legitimate business exp. But, as u are using the car for prof as well as for personal use, u should disallow 1/3rd of the total exp voluntarily. This is to be done only in the computation sheet.
Ram Avtar Singh
(Nagari Sultanpur U.P.Delhi)
(14482 Points)
Replied 17 June 2008
Dear Sir
U can claim Interest as Expenses but Interest Certificate is required for the same which will be issued by your bankers.
Ashish
(Professional)
(117 Points)
Replied 17 June 2008
thanks for replies, If i get a interrest certificate then i can get a interest deduction, secondly bank charge any charges for this certificate?
How to proof that i am using this for personal purpose too or fully for business purpose?
Sumit
(CA Practice )
(675 Points)
Replied 17 June 2008
Hi Ashish
You can claim all expenses incurred by you on your car as expenses including interest, depreciation, petrol, repair & maintenance expenses, insurance etc.
But it is advisable to you to deduct certain amount (usually around 15-20%)from these expenses as you are using the car for your personal purposes also.
As required by section 38(2), you have to deduct a fair proportionate amount towards personal expenses from the expenses incurred by you.
Now regarding claiming interest you have to collect Your car loan statement from the bank showing the interest paid on the car during the year.
Banks do not charge any amount for issuing such statements.
There is nothing which can prove that whether you are using the car for your personal puposes also but if you have the only car then it is assumed that you are also using it for your personal purpose.
Regards
Sumit Aggarwal
9971444888
Ashish
(Professional)
(117 Points)
Replied 17 June 2008
Hello sumit, thanks for reply. Definately i will deduct certain amount from overall expenses but only for Interest I can take the benefit of full interest paid amount in that financial year?
I checked with HDFCbank website and they charged Rs 500/- for issuing statement. So, i was thinking bank account statement copy or document in which mentioned the schedule of the payment can be used for this purpose? Because amount deducted from my hdfc account directly without any my intervention!
https://www.hdfcbank.com/personal/loans/new_car_loans/new_car_fees.htm
Sumit
(CA Practice )
(675 Points)
Replied 17 June 2008
Hi Ashish
Yaar Banks normally don't charge interest for these statements.
you should contact their customer care and they should definitely credit the amount charged for issuing such statements. These terms and conditions are just meant for writing something on their website but if you have good communication skills then try to credit fees of Rs.500/-.
Even for interest also you have to deduct the proportionate amount.
Ashish
(Professional)
(117 Points)
Replied 17 June 2008
ok, thanks. I will try at the year end.
Please tell me one more thing...
Last year, my income was 5,50000 and after deducting several expenses that comes to 3,60000. (1,90000 as expenses, 80C not included in this) so in ITR my CA written in the Gross Total Income section is 3,60000.
So, is this correct because when i contact the bank for Home loan they consider 3,60000 as my income for calculation of loan approval and not Rs 5,50000.
Sumit
(CA Practice )
(675 Points)
Replied 17 June 2008
yes, your gross total income shall be Rs.360000/- only.
Banks also consider the expenses before granting the loans, so they are correct in taking amount as Rs.3,60000/-.
Further in case you have taken the home loan then you can claim interest deduction of upto Rs.150000/- under section 24(b) in case of constructed house and for principal amount you can claim deduction under section 80C.
Ashish
(Professional)
(117 Points)
Replied 17 June 2008
ok, in a 6 lac business income what can be the deductions can be taken after the following... (no child, no marriage and no education loan)
1 lac - 80 C
1.5 lac - Home Loan Interest
till 15000 - 80D
till 20000 (senior citizens parents medical insurance)
And some expenses of rent, phone, electricity, petrol, peon, stationary, computer and so on.....
anything else?
Sumit
(CA Practice )
(675 Points)
Replied 17 June 2008
apart from the above,
you can also take deduction under section 80G for donation (but tax dene main zyada fayda hai donate karne se) and there is no limit for it.
Legally no other deductions is available (as per my view) but....... you know what i mean to say.
Ashish
(Professional)
(117 Points)
Replied 17 June 2008
sumit, i can understand your viewpoint. You can send me PM for any other possible ways may be not written in books. Because legally or illegally i don't know more tricks to save tax. :)
Sumit
(CA Practice )
(675 Points)
Replied 17 June 2008
you just give me your email id
my email id is sumit.aggarwal @ rediffmail.com
Phone No. is 9971444888
kalpana hegde
(chartered accountant)
(32 Points)
Replied 23 June 2008
Hi,
I heard somewhere that this year due date for filing the income tax returns for all categories july 31 2008 I want to know is it correct or not
Sumita Kulesari
(10 Points)
Replied 07 June 2024
Yes, car loan EMIs can be shown as an expense. When taking a car loan from Kotak Mahindra Bank, the monthly installments (EMIs) you pay can be classified as an expense in your personal or business accounting. For businesses, this can help in tracking operational costs and managing cash flow. While the principal repayment does not typically qualify for tax deductions, the interest component of the EMI may be eligible for tax benefits under certain conditions. Always consult with a financial advisor or accountant to understand how best to record these expenses based on your specific situation and accounting practices.
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