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New rules after abolishen of FBT on car claims

jinde (payroll) (26 Points)

30 September 2009

Hi All,

I want to know wheather the IT dept, has released the new rules on perquisite on car claims like petrol and other maintanence for self owned cars and company leased vehicle instead of FBT.

Let me know the recent updation on this.

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4 Replies

Juzer Sadikot (CA - innovative solutions for Imports and Exports) (1309 Points)
Replied 30 September 2009

Dear Mr. Jinde,

I think Rule 3(2) shall be applicable impliedly to all the entities who are not chargeble to FBT, which is reproduced below;

(2) (A) The value of perquisite provided by way of use of motor car to an employee by an employer, who is not liable to pay fringe benefit tax under Chapter XII-H of the Act, shall be determined in accordance with the following Table, namely :—

Table II

Value of Perquisite per CalendAr Month

Sl. No.	Circumstances	Where cubic capacity of engine does not exceed 1.6 litres	Where cubic capacity of engine exceeds 1.6 litres
(1)	(2)	(3)	(4)
(1)	Where the motor car is owned or hired by the employer and—	No value: Provided that the documents specified in clause (B) of this sub-rule are maintained by the employer. Actual amount of expenditure incurred by the employer on the running and maintenance of motor car during the relevant previous year including remuneration, if any, paid by the employer to the chauffeur as increased by the amount representing normal wear and tear of the motor car and as reduced by any amount charged from the employee for such use.	No value: Provided that the documents specified in clause (B) of this sub-rule are maintained by the employer. Actual amount of expenditure incurred by the employer on the running and mainte-nance of motor car during the relevant previous year including remuneration, if any, paid by the employer to the chauffeur as increased by the amount representing normal wear and tear of the motor car and as reduced by any amount charged from the employee for such use.
(a)	is used wholly and exclusively in the performance of his official duties;
(b)	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;
(c)	is used partly in the performance of duties and partly for private or personal purposes of his own or any member of his household and
	(i) the expenses on maintenance and running are met or reimbursed by the employer,	Rs. 1,200 (plus Rs. 600, if chauffeur is also provided to run the motor car)	Rs. 1,600 (plus Rs. 600, 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. 400 (plus Rs. 600, if chauffeur is also provided by the employer to run the motor car)	Rs. 600 (plus Rs. 600, if chauffeur is also provided to run the motor car)
(2)	Where the employee owns a motor car but the actual running and maintenance charges (including remunera-tion of the chauffeur, if any) are met or reimbursed to him by the employer and
	(i) such reimbursement is for the use of the vehicle wholly and exclusively for official purposes,	No value: Provided that the documents specified in clause (B) of this sub-rule are maintained by the employer.	No value: Provided that the documents specified in clause (B) of this sub-rule are maintained by the employer.
	(ii) such 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, the actual payment of expenditure incurred by the employer as reduced by the amount's specified in Sl.No.(1)(c)(i) above	Subject to the provisions of clause(B)of this sub-rule, the actual payment of expenditure incurred by the employer as reduced by the amount's 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 and (i) such reimbursement is for the use of the vehicle wholly and exclusively for official purposes, (ii) such reimbursement is for the use of the vehicle partly for official purposes and partly for personal or private purposes of the employee.	No value: Provided that the documents specified in clause (B) of this sub-rule are maintained by the employer. Subject to the provisions of clause(B)of this sub-rule, the actual payment of expenditure incurred by the employer as reduced by the amount's specified in Sl.No.(1)(c)(i) above	Not applicable

Provided that 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-car or all or any 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 Table II 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 Table II 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 Table II, 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 this sub-rule, 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.]

Thanks & Regards

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lakshmi (HR) (22 Points)
Replied 23 November 2009

can someone throw more light on it

Juzer Sadikot (CA - innovative solutions for Imports and Exports) (1309 Points)
Replied 23 November 2009

Dear Lakshmi,

Would like to know ur specific concern.

Regards

Juzer

CA Jayesh Gokalgandhi (CA in Industry) (126 Points)
Replied 30 November 2009

Does this mean that we calculate the perquisite value as per this rule and calculate employee TDS accordingly? coz to my mind when FBT provisions were Introduced these rules were made redundent.

Again when the FBT rules have been removed these rules have not been explicitly made applicable now.

Hence to my mind people are waiting from some guidelines from the Finance Minister in this respect before starting to deduct TDS at the old rate.

I think ICAI should take this up with the FM as now only 4 months are available for deduction of additional tax and it may cause a lot of burden to employees, especially those who have planned their salary structure during FBT regime.

Regards,

Jayesh