CAR Expenses Reimbusred Whether Perqusite or not?
This query is : Open
20 October 2009
Our company reimburses to employees in cash the Maintenance and Petrol cost incurred on the vehicle.The vehicle is owned by employee himself. The company reimburses Rs.20 as petrol & maintenance cost for every kms travelled by the employee during the month for the official purpose.The most of the travelling kms includes travelling from Residence to Office , factories, customers, etc..
The company also maintains the records/details which includes the date of journey, destination mileage in Kms and amount (total kms X Rs.20 for each Kms).
The reimbursement amount of Rs.20 for every km is fixed on following facts:-
Normal Taxi or Meru( Cool Cab) if hired for the day will charge fare of Rs.14-15 per Km. But considering the more comfort of employee in his own vehicle the company has decided to give reimbursement of Rs.20.
We would like to have your opinion on the following:-
1.Whether there would be any taxable perquisite in hands of our employee. If the answer is No, will any kind of taxability arise to our company in view of FBT being abolished from 01.04.09 , as earlier the company was depositing FBT on this reimbursement.
2. Whether our companies contention to reimburse the employee on the basis of the above facts will hold good.If the answer is No, what can be acceptable rate of reimbursement as per Income Tax Act whereby the employee or our company could not be taxed.
3.Whether the records maintained by us are sufficient w.r.t. Rule 17.
Please give me your valuable feedback on this matter.
The company also maintains the records/details which includes the date of journey, destination mileage in Kms and amount (total kms X Rs.20 for each Kms).
The reimbursement amount of Rs.20 for every km is fixed on following facts:-
Normal Taxi or Meru( Cool Cab) if hired for the day will charge fare of Rs.14-15 per Km. But considering the more comfort of employee in his own vehicle the company has decided to give reimbursement of Rs.20.
We would like to have your opinion on the following:-
1.Whether there would be any taxable perquisite in hands of our employee. If the answer is No, will any kind of taxability arise to our company in view of FBT being abolished from 01.04.09 , as earlier the company was depositing FBT on this reimbursement.
2. Whether our companies contention to reimburse the employee on the basis of the above facts will hold good.If the answer is No, what can be acceptable rate of reimbursement as per Income Tax Act whereby the employee or our company could not be taxed.
3.Whether the records maintained by us are sufficient w.r.t. Rule 17.
Please give me your valuable feedback on this matter.
20 October 2009
Form AY 2010-11 the Rule 3 for valuation of perquisite again applicable and which states.
Where car owned by the employee:
If you are claiming that car is used wholly for official purpose nothing is taxable provided
a) The employer has maintained complete details of journey for official purpose ( log book )
b)The employer gives a certificate that the expenditure incurred wholly & exclusively for official duties.
If the car used both for official and private purpose :
a) Actual expenditure incurred by employer
b)less : Rs. 1200+600 or 1600+600
c) a-b is taxable.
Now in my opinion:"actual expenditure incurred" means actual fuel cost and actual maintenance cost supported by bills. Any fixed reimbursement, based on e.g. 20Rs/KM may not be allowed as actual expenses incurred.
I hope other experts will express their valuable opinion.
Where car owned by the employee:
If you are claiming that car is used wholly for official purpose nothing is taxable provided
a) The employer has maintained complete details of journey for official purpose ( log book )
b)The employer gives a certificate that the expenditure incurred wholly & exclusively for official duties.
If the car used both for official and private purpose :
a) Actual expenditure incurred by employer
b)less : Rs. 1200+600 or 1600+600
c) a-b is taxable.
Now in my opinion:"actual expenditure incurred" means actual fuel cost and actual maintenance cost supported by bills. Any fixed reimbursement, based on e.g. 20Rs/KM may not be allowed as actual expenses incurred.
I hope other experts will express their valuable opinion.
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20 October 2009
Dear sir,
1. As you are being a company providing the facility of car to your employee is now taxable for perquisite for employee subject to that he must be an specified employee.
2. If the proper records has been kept by you regarding destination, kms. Etc. then journey for personal purpose will be taxable only to the extent you reimbursed.
3. But if the car fully used for official purpose nothing is taxable for employee and nor for you.
4. As per your given facts I suggest and presume that the car wholly used for official purpose and therefore , facility of car is not taxable perquisite for the employee.
5. Proper records maintain by you is very good, so pls keep it up.
6. If the car used for both official as well as personal then Rs.1200 + Rs.600 per month will be taxable value of perquisite.
1. As you are being a company providing the facility of car to your employee is now taxable for perquisite for employee subject to that he must be an specified employee.
2. If the proper records has been kept by you regarding destination, kms. Etc. then journey for personal purpose will be taxable only to the extent you reimbursed.
3. But if the car fully used for official purpose nothing is taxable for employee and nor for you.
4. As per your given facts I suggest and presume that the car wholly used for official purpose and therefore , facility of car is not taxable perquisite for the employee.
5. Proper records maintain by you is very good, so pls keep it up.
6. If the car used for both official as well as personal then Rs.1200 + Rs.600 per month will be taxable value of perquisite.
21 October 2009
Dear Mr Sanjay & Mr Punnet
Thank you for your feedback
Can you please clarify the following:-
1.What is the definition of "actual running and maintenance charges" ? What if the actual running and maintenance charges are not readily available or it is difficult to calculate actual running and maintenance charges? Whether the same can be considered as actual kms travelled X normal car fare per kms?Is there any other solution?
2.Whether the employer liable to take original bills related to actual running and maintenance cost from the employee in order to reimburse the same.
Thank you for your feedback
Can you please clarify the following:-
1.What is the definition of "actual running and maintenance charges" ? What if the actual running and maintenance charges are not readily available or it is difficult to calculate actual running and maintenance charges? Whether the same can be considered as actual kms travelled X normal car fare per kms?Is there any other solution?
2.Whether the employer liable to take original bills related to actual running and maintenance cost from the employee in order to reimburse the same.
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