H S Rajashree (MBA in Finance) (221 Points)
30 March 2010Hi
If a company gives an option to employees to take a sub lease of his/her car with spouse, what would be the perquisite value taxalbe in the hands of the employee? Would it be construed as 'car owned or hired by the employer' for perk purposes? Lease rentals and running and maintenance will be borne by the employer.
I need an answer very urgently please...
Rgds
Rajashree
Suresh
(CA Final Student)
(177 Points)
Replied 30 March 2010
Perquisit = Total amount paid by employer less amount of employee paid to employer...(as per my opinion)
wait for other frnds reply...
Ratan Deep Saxena
(Asstt Manager (Accounts & Finance))
(2998 Points)
Replied 30 March 2010
The relevant rules required to compute the valuation of such perquisites were awaited ever since the change was brought about by the Finance Act. Theserules have now been notified on dated 18-12-2009 wide Notification No. 94120091F No. 14212512009-s 0 (TPL), by the Central Board of Direct Taxes and the existing Rule 3 and insertion of Rule 40F of the Income-TaxRules, 1962 (“The Rules”) has been substituted completely. The new rule 3 is deemed to have come into effect from 1 st day of April 2009.
MOTOR CAR
The perquisites value of a motor car provided by an employer both for official and personal use has been enhanced by Rs. 600 to 800 per month depending on the engine capacity of the car. Also, the perquisites valuation for employer-provided chauffeur in such cases has been increased from Rs. 600 per month to Rs. 900 per month.
The new valuation rules as prescribed by CBDT and the comparative analysis with the earlier perquisite rules (Rule 3) have in respect of motor car owned or hired by employer and provided for personal purposes (Partly or Fully) of employees is tabulated as under:
| Nature of benefit provided bythe employer | Value of perquisite as pererstwhile rules | Value of perquisite as pererstwhile rules |
| Motor car is owned/ hired by employer | ||
| (a) Car used exclusively in performance of official dutiesRule 3(2)(A)(1)(a) | No value provided specified documents1 are maintained by employer | Same as erstwhile provisions |
| (b) Car used exclusively for personal purpose by the employee or any member of his household2 and expenses on maintenance and running are met/ reimbursed by employerRule 3(2)(A)(1)(b) |
Actual amount of expenditure incurred including the remuneration paid to the chauffeur by the employerplus amount representing normal wear and tear of the car3
_____________ as reduced by any amount charged from the employee |
Same as erstwhile provisions |
|
(c) Car used partly for official duties and partly for personal purpose by employee or any member of his household
|
||
| (i) Expenses on maintenance and running are met/ reimbursed by employerRule 3(2)(A)(1)(c)(i) | Rs 1,200*4/Rs 1,600**5 per month (plus Rs 600 if chauffeur is provided) | Rs 1,800*Rs 2,400** per month (plus Rs 900 if chauffeur is provided) |
| (ii) Expenses on maintenance and running for personal use are fully met by employeeRule 3(2)(A)(1)(c)(ii) | Rs 400*6Rs 600**7 per month (plus Rs 600 if chauffeur is provided) | Rs 600*/Rs 900** per month (plus Rs 900 if chauffeur is provided) |
Note to above:-
1. Specified Documents:
(a) 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
The employer gives a certificate to the effect that the expenditure 2. Member of household includes spouse(s), children and their spouses, parents and servants and dependants
3. The normal wear and tear of a motor car shall be taken @ 10% per annum of the actual cost of the motor car(s)
4 * Where cubic capacity of engine does not exceed 1.6 litres
5 ** Where cubic capacity of engine exceeds 1.6 litres
6 * Where cubic capacity of engine does not exceed 1.6 litres
7 ** Where cubic capacity of engine exceeds 1.6 litres
|
Nature of benefit provided by the employer |
Value of perquisite as per erstwhile rules |
Value of perquisite as per new rules |
Motor car is owned by employee and running expenses met or reimbursed by employer
|
(a) Car used exclusively in performance of official duties
Rule 3(2)(A)(2)(i) |
No value provided the specified documents1 are maintained by employer | Same as erstwhile provisions |
| (b) Car used partly for official duties and partly for personal purpose by him or any member of his household |
Actual amount incurred by employer
as reduced by Rs 1 ,200*/Rs 1,600** per month (plus Rs 600 if chauffeur is provided) |
Actual amount incurred by employer
as reduced by Rs 1,800*/Rs 2,400** per month (plus Rs 900 if chauffeur is provided) (Refer Note 2) |
| Rule 3(2)(A)(2)(ii) |
Any other automotive conveyance is owned by employee and running and maintenance expenses are met/ reimbursed by employer
|
(a) Used exclusively in performance of official duties
Rule 3(2)(A)(3)(i) |
No value provided the specified documents are maintained by employer | Same as erstwhile provisions |
| (b) Used partly for official duties and partly for personal purpose by him | Actual amount of expenditure incurred by employer as reduced by Rs 1,200*/Rs 1,600** per month (plus Rs 600 if chauffeur is provided) |
Actual amount of expenditure incurred by employer as
reduced by Rs 900 per month * Refer Note 2 |
| Rule 3(2)(A)(3)(ii) |
1. Specified Documents:
(a) 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 performance of official duties
2: Wherein the employer or employee claims:
- that motor car has been used exclusively in performance of office duties,
or
- actual expenses on running and maintenance of the car owned by employee
is more than the amounts deductible as specified, then he may claim a higher amount attributable to such use and the value of the perquisite shall be actual amount attributable to official use of the vehicle, provided the specied documents are maintained by employer.
regards,
ratan
H S Rajashree
(MBA in Finance)
(221 Points)
Replied 30 March 2010
| Originally posted by : Ratan Deep Saxena | ||
 |
The relevant rules required to compute the valuation of such perquisites were awaited ever since the change was brought about by the Finance Act. Theserules have now been notified on dated 18-12-2009 wide Notification No. 94120091F No. 14212512009-s 0 (TPL), by the Central Board of Direct Taxes and the existing Rule 3 and insertion of Rule 40F of the Income-TaxRules, 1962 (“The Rules”) has been substituted completely. The new rule 3 is deemed to have come into effect from 1 st day of April 2009. MOTOR CAR The perquisites value of a motor car provided by an employer both for official and personal use has been enhanced by Rs. 600 to 800 per month depending on the engine capacity of the car. Also, the perquisites valuation for employer-provided chauffeur in such cases has been increased from Rs. 600 per month to Rs. 900 per month. The new valuation rules as prescribed by CBDT and the comparative analysis with the earlier perquisite rules (Rule 3) have in respect of motor car owned or hired by employer and provided for personal purposes (Partly or Fully) of employees is tabulated as under: Nature of benefit provided bythe employer Value of perquisite as pererstwhile rules Value of perquisite as pererstwhile rules Motor car is owned/ hired by employer (a) Car used exclusively in performance of official dutiesRule 3(2)(A)(1)(a) No value provided specified documents1 are maintained by employer Same as erstwhile provisions (b) Car used exclusively for personal purpose by the employee or any member of his household2 and expenses on maintenance and running are met/ reimbursed by employerRule 3(2)(A)(1)(b) Actual amount of expenditure incurred including the remuneration paid to the chauffeur by the employerplus amount representing normal wear and tear of the car3 _____________ as reduced by any amount charged from the employee Same as erstwhile provisions (c) Car used partly for official duties and partly for personal purpose by employee or any member of his household (i) Expenses on maintenance and running are met/ reimbursed by employerRule 3(2)(A)(1)(c)(i) Rs 1,200*4/Rs 1,600**5 per month (plus Rs 600 if chauffeur is provided) Rs 1,800*Rs 2,400** per month (plus Rs 900 if chauffeur is provided) (ii) Expenses on maintenance and running for personal use are fully met by employeeRule 3(2)(A)(1)(c)(ii) Rs 400*6Rs 600**7 per month (plus Rs 600 if chauffeur is provided) Rs 600*/Rs 900** per month (plus Rs 900 if chauffeur is provided) Note to above:- 1. Specified Documents: (a) 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 The employer gives a certificate to the effect that the expenditure 2. Member of household includes spouse(s), children and their spouses, parents and servants and dependants 3. The normal wear and tear of a motor car shall be taken @ 10% per annum of the actual cost of the motor car(s) 4 * Where cubic capacity of engine does not exceed 1.6 litres 5 ** Where cubic capacity of engine exceeds 1.6 litres 6 * Where cubic capacity of engine does not exceed 1.6 litres 7 ** Where cubic capacity of engine exceeds 1.6 litres Nature of benefit provided by the employer Value of perquisite as per erstwhile rules Value of perquisite as per new rules Motor car is owned by employee and running expenses met or reimbursed by employer (a) Car used exclusively in performance of official duties Rule 3(2)(A)(2)(i) No value provided the specified documents1 are maintained by employer Same as erstwhile provisions (b) Car used partly for official duties and partly for personal purpose by him or any member of his household Actual amount incurred by employer as reduced by Rs 1 ,200*/Rs 1,600** per month (plus Rs 600 if chauffeur is provided) Actual amount incurred by employer as reduced by Rs 1,800*/Rs 2,400** per month (plus Rs 900 if chauffeur is provided) (Refer Note 2) Rule 3(2)(A)(2)(ii) Any other automotive conveyance is owned by employee and running and maintenance expenses are met/ reimbursed by employer (a) Used exclusively in performance of official duties Rule 3(2)(A)(3)(i) No value provided the specified documents are maintained by employer Same as erstwhile provisions (b) Used partly for official duties and partly for personal purpose by him Actual amount of expenditure incurred by employer as reduced by Rs 1,200*/Rs 1,600** per month (plus Rs 600 if chauffeur is provided) Actual amount of expenditure incurred by employer as reduced by Rs 900 per month * Refer Note 2 Rule 3(2)(A)(3)(ii) 1. Specified Documents: (a) 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 performance of official duties 2: Wherein the employer or employee claims: - that motor car has been used exclusively in performance of office duties, or - actual expenses on running and maintenance of the car owned by employee is more than the amounts deductible as specified, then he may claim a higher amount attributable to such use and the value of the perquisite shall be actual amount attributable to official use of the vehicle, provided the specied documents are maintained by employer. regards, ratan I know these but where does lease option fit in this? |
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H S Rajashree
(MBA in Finance)
(221 Points)
Replied 30 March 2010
| Originally posted by : H S Rajashree | ||
|
|
Originally posted by : Ratan Deep Saxena I know these. But where does lease option fit in these. should we assume it un 'car owned or hired by the employer' category? The relevant rules required to compute the valuation of such perquisites were awaited ever since the change was brought about by the Finance Act. Theserules have now been notified on dated 18-12-2009 wide Notification No. 94120091F No. 14212512009-s 0 (TPL), by the Central Board of Direct Taxes and the existing Rule 3 and insertion of Rule 40F of the Income-TaxRules, 1962 (“The Rules”) has been substituted completely. The new rule 3 is deemed to have come into effect from 1 st day of April 2009. MOTOR CAR The perquisites value of a motor car provided by an employer both for official and personal use has been enhanced by Rs. 600 to 800 per month depending on the engine capacity of the car. Also, the perquisites valuation for employer-provided chauffeur in such cases has been increased from Rs. 600 per month to Rs. 900 per month. The new valuation rules as prescribed by CBDT and the comparative analysis with the earlier perquisite rules (Rule 3) have in respect of motor car owned or hired by employer and provided for personal purposes (Partly or Fully) of employees is tabulated as under: Nature of benefit provided bythe employer Value of perquisite as pererstwhile rules Value of perquisite as pererstwhile rules Motor car is owned/ hired by employer (a) Car used exclusively in performance of official dutiesRule 3(2)(A)(1)(a) No value provided specified documents1 are maintained by employer Same as erstwhile provisions (b) Car used exclusively for personal purpose by the employee or any member of his household2 and expenses on maintenance and running are met/ reimbursed by employerRule 3(2)(A)(1)(b) Actual amount of expenditure incurred including the remuneration paid to the chauffeur by the employerplus amount representing normal wear and tear of the car3 _____________ as reduced by any amount charged from the employee Same as erstwhile provisions (c) Car used partly for official duties and partly for personal purpose by employee or any member of his household (i) Expenses on maintenance and running are met/ reimbursed by employerRule 3(2)(A)(1)(c)(i) Rs 1,200*4/Rs 1,600**5 per month (plus Rs 600 if chauffeur is provided) Rs 1,800*Rs 2,400** per month (plus Rs 900 if chauffeur is provided) (ii) Expenses on maintenance and running for personal use are fully met by employeeRule 3(2)(A)(1)(c)(ii) Rs 400*6Rs 600**7 per month (plus Rs 600 if chauffeur is provided) Rs 600*/Rs 900** per month (plus Rs 900 if chauffeur is provided) Note to above:- 1. Specified Documents: (a) 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 The employer gives a certificate to the effect that the expenditure 2. Member of household includes spouse(s), children and their spouses, parents and servants and dependants 3. The normal wear and tear of a motor car shall be taken @ 10% per annum of the actual cost of the motor car(s) 4 * Where cubic capacity of engine does not exceed 1.6 litres 5 ** Where cubic capacity of engine exceeds 1.6 litres 6 * Where cubic capacity of engine does not exceed 1.6 litres 7 ** Where cubic capacity of engine exceeds 1.6 litres Nature of benefit provided by the employer Value of perquisite as per erstwhile rules Value of perquisite as per new rules Motor car is owned by employee and running expenses met or reimbursed by employer (a) Car used exclusively in performance of official duties Rule 3(2)(A)(2)(i) No value provided the specified documents1 are maintained by employer Same as erstwhile provisions (b) Car used partly for official duties and partly for personal purpose by him or any member of his household Actual amount incurred by employer as reduced by Rs 1 ,200*/Rs 1,600** per month (plus Rs 600 if chauffeur is provided) Actual amount incurred by employer as reduced by Rs 1,800*/Rs 2,400** per month (plus Rs 900 if chauffeur is provided) (Refer Note 2) Rule 3(2)(A)(2)(ii) Any other automotive conveyance is owned by employee and running and maintenance expenses are met/ reimbursed by employer (a) Used exclusively in performance of official duties Rule 3(2)(A)(3)(i) No value provided the specified documents are maintained by employer Same as erstwhile provisions (b) Used partly for official duties and partly for personal purpose by him Actual amount of expenditure incurred by employer as reduced by Rs 1,200*/Rs 1,600** per month (plus Rs 600 if chauffeur is provided) Actual amount of expenditure incurred by employer as reduced by Rs 900 per month * Refer Note 2 Rule 3(2)(A)(3)(ii) 1. Specified Documents: (a) 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 performance of official duties 2: Wherein the employer or employee claims: - that motor car has been used exclusively in performance of office duties, or - actual expenses on running and maintenance of the car owned by employee is more than the amounts deductible as specified, then he may claim a higher amount attributable to such use and the value of the perquisite shall be actual amount attributable to official use of the vehicle, provided the specied documents are maintained by employer. regards, ratan I know these but where does lease option fit in this? |
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