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Motor Car Perquisite calculation.

muralidhar (Excecutive Accounts) (62 Points)

03 February 2011

Dear Sir,

Can any one share employees motor car perquisite caculation?

Regards,

Murali

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5 Replies

Manmohan ACA, CS (Chartered Accountant ) (14243 Points)
Replied 03 February 2011

Use of Motor Car

S. No.	Circumstances		Engine Capacity upto 1600 cc	Engine Capacity above 1600 cc
1	Where the motor car is owned or hired by the employer
1 (a)	The motor car used wholly and exclusively in the performance of his official. duties;		Nil	Nil
1 (b)	The motor car is used exclusively for the private or personal purposes of the employee or any member of his household and the running and maintenance expenses are met or reimbursed by the employer.		Actual amount of expenditure incurred by the employer on the running and maintenance of motor car including remuneration paid by the employer to the chauffeur and increased by the amount representing normal wear and tear of the motor car less any amount charged from the employee for such use.
1 (c)	The motor car is used partly in the performance of duties and partly for private or personal purposes of the employee or any member of his household and
	(i)the expenses on maintenance and running are met or reimbursed by the employer	Rs. 1,800 (plus Rs. 900, if chauffeur is also provided to run the motor car)		Rs. 2,400 (plus Rs. 900, if chauffeur is also provided to run the motor car)
	(ii) the expenses on running and maintenance for such private or personal use are fully met by the assessee.	Rs. 600 (plus Rs. 900, if chauffeur is also provided by the employer to run the motor car)		Rs. 900 (plus Rs. 900, if chauffeur is also provided to run the motor car)
2	Where the employee owns the vehicle and the actual running and maintenance charges including remuneration of the chauffeur are met or reimbursed to him by the employer
2 (i)	The reimbursement is for the use of the vehicle wholly and exclusively for official purposes	Nil Provided that the documents specified in clause (B) of this sub-rule are maintained by the employer.		Nil Provided that the documents specified in clause (B) of this sub-rule are maintained by the employer.
2 (ii)	The reimbursement is for the use of the vehicle partly for official purposes and partly for personal or private purposes of the employee or any member of his household.	Subject to the provisions of clause (B) of this sub-rule, actual expenditure incurred by the employer as reduced by the amount specified in Sl.No.(1)(c)(i) above.		Subject to the provisions of clause (B) of this sub-rule, actual expenditure incurred by the employer as reduced by the amount specified in Sl.No.(1)(c)(i) above.
3	Where the employee owns any other automotive conveyance but the actual running and maintenance charges are met or reimbursed to him by the employer
	such reimbursement is for the use of the vehicle wholly and exclusively for official purposes;		Nil Provided that the documents specified in clause (B) of this sub-rule are maintained by the employer.	Not Applicable
	such reimbursement is for the use of vehicle partly for official purposes and partly for personal or private purposes of the employee.		Subject to the provisions of clause (B) of this sub-rule, the actual amount of expenditure incurred by the employer as reduced by the amount of Rs. 900.	Not Applicable

Provided that

1. where one or more motor-cars are owned or hired by the employer and the employee or any member of his household are allowed the use of such motor-cars (otherwise than wholly and exclusively in the performance of his duties), the value of perquisite shall be the amount calculated in respect of one car in accordance with Sl. No. (1)(c)(i) of the above Table as if the employee had been provided one motor-car for use partly in the performance of his duties and partly for his private or personal purposes and the amount calculated in respect of the other car or cars in accordance with Sl. No. (1)(b) of above Table as if he had been provided with such car or cars exclusively for his private or personal purposes.

(B) Where the employer or the employee claims that the motor-car is used wholly and exclusively in the performance of official duty or that the actual expenses on the running and maintenance of the motor-car owned by the employee for official purposes is more than the amounts deductible in Sl. No. 2(ii) or 3(iii) of above Table, he may claim a higher amount attributable to such official use and the value of perquisite in such a case shall be the actual amount of charges met or reimbursed by the employer as reduced by such higher amount attributable to official use of the vehicle provided that the following conditions are fulfilled:-
(a) the employer has maintained complete details of journey undertaken for official purpose which may include date of journey, destination, mileage, and the amount of expenditure incurred thereon;
(b) the employer gives a certificate to the effect that the expenditure was incurred wholly and exclusively for the performance of official duties.

Explanation - For the purposes of valuation, the normal wear and tear of a motor-car shall be taken at 10% per annum of the actual cost of the motor-car or cars.

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CA Prateek Garg (CA in Practice) (1447 Points)
Replied 03 February 2011

Computation of use of Motor Car or any other automotive vehicle

When used partly for office & partly for personal purpose

S.NO	Circumstances		Upto 1.6 Ltrs.	Above 1.6 Ltrs.
1	When car owned by employer
	a.	R&M incurred by employer	1800 p.m. (900pm for driver)	2400 p.m. (900pm for driver)
	b.	R&M incurred by employee	600 p.m. (900pm for driver)	900 p.m. (900pm for driver)
2.	When car owned by employee
	a.	R&M incurred by employer	Actual exp.-1800(900)	Actual exp.-2400(900)
	b.	R&M incurred by employee	Nil	Nil

to put it another way -

S.NO	Circumstances		Upto 1.6 Ltrs.	Above 1.6 Ltrs.
1	R&M incurred by employer
	a.	Car owned by employer	1800 p.m. (900pm for driver)	2400 p.m. (900pm for driver)
	b.	Car owned by employee	Actual exp.-1800(900)	Actual exp.-2400(900)
2.	R&M incurred by employee
	a.	Car owned by employer	600 p.m. (900pm for driver)	900 p.m. (900pm for driver)
	b.	Car owned by employee	Nil	Nil

How to Learn

If used exclusively for official purpose then no perquisite in any case.
If used exclusively for personal purpose then perquisite will be valued at actual expenditure by employer + 10% p.a. for motor cars normal wear & tear.
If used for both purposes then-

a. If only car (No R&M) is given by the employer then Rs. 600 or 900.

b. If R&M is incurred by the employer then 1800 or 2400 is deemed to be used for non owner and remaining expenses is deemed for the owner of the car & perquisite shall be valued accordingly.

Shruti (AM-Finance) (32 Points)
Replied 03 February 2011

Perquisite in respect of Motor Car:

*Where car is owned by the employee*
A. When exps. Are met by employee		Not a perquisite, not taxable himself.
B. When exps. met by employer
1. Car is used wholly for official	No value provided
2. Car is used wholly for private	Step 1. Actual exp. Incur by employer
	Step 2. *Less:* Amount recovered from employee
	Balance amt. is taxable value.
3. Partially used for both	Step 1. Actual exp. Incur by employer
	Step 2. *Less:* amt. used for official purposes
	Step 3. Less: Amount recovered from employee
*Where car is owned or hired by the employer*
A. When exps. met by employer
1. If the car is wholly used for official	No value provided
2. Car is used wholly for private	Step 1. Actual exp. Incur by employer
	Step 2. *Less:* Amount recovered from employee (Note 1)
	Balance amt. is taxable value.
3. Partially used for both	1800 p/m if cubic cap. Doesn't exceed 1.6 liter
	2400 p/m if cubic cap. Exceed 1.6 liter.
	900 p/m if chauffer provided
B. When exps. met by employee
1. If the car is wholly used for official	Not a perquisite, not taxable himself.
2. Car is used wholly for private	Step 1. Actual exp. Incur by employer
	Step 2. *Less:* Amount recovered from employee (Note 2)
	Balance amt. is taxable value.
3. Partially used for both	600 p/m if cubic cap doesn't exceed 1.6 liter
	900 p/m if cubic cap exceed 1.6 liter
	900 p/m if chauffer provided
*When employee owns an automotive conveyance (other than car) & running & maintenance charge met by employer*
A. If the car is wholly used for official	No value provided
B. Partially used for both	Step 1. Actual exp. Incur by employer
	Step 2. *Less:* amt. used for official purposes (Note 3)
	Step 3. *Less:* Amount recovered from employee
	Balance amt. is taxable value.
Note 1	1800 p/m if cubic cap. Does not exceed 1.6 liter
	2400 p/m if cubic cap. Exceed 1.6 liter.
	900 p/m if chauffer provided
Note 2	10% p.a. of actual cost of car.
	Hire charges if car is taken on hire
	Chauffer salary any.
Note 3	900 p/m or a higher sum for official purposes.