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Perquisite on Motor Car & Driver

Vinod Nayak (Regional Manager - Finance) (69 Points)

13 January 2010

Case 1:

The company has taken car on lease and the same is provided to the employee. Repairs and maintenance borne by the leasing company. The company also reimburses the driver's salary (Rs. 4000 p.m).

Case 2:

The car is owned by the employee. Repairs and Maintenance is borne by the company and also driver's salary is reimbursed (Rs.4,000 p.m.)

Cubic Capacity of the car < 1.6 liters

Please clarify the value of perquisite.

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12 Replies

Amir (Learner) (4016 Points)
Replied 13 January 2010

Dear Vinod,

Value of perks depends upon the usage of Car,

plz clarify whether the car is used

1) exclusively for personal use

2) exclusively for official use

3) for both official & personal use

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FATEMA (CHARTERED ACCOUNTANT) (719 Points)
Replied 13 January 2010

CASE1:

If it is wholly for official use then value of perquisite is NIL.

If wholly for private use then the value of perquisite will actual expenditure incurred for maintenance or running of car,remuneration of driver and hire charges.

If it is Partly for official use and partly for private use then,

Engine capacity : upto 1.6 litre - Rs.2,700 per month

Engine capacity : exceeds 1.6 lite - Rs.3,300 per month

CASE 2.

If wholly for official use then value of perquisite is nil

If wholly for private use then value of perquisite is actual expenditure incurred by employer

If partly for official use and partly for private use then value of perrquisite is a sum actually spent as reduced by an amount Rs.1800 (without driver) or Rs.2700 (with driver)

Regards,

Fatema

2 Like

Vinod Nayak (Regional Manager - Finance) (69 Points)
Replied 13 January 2010

Dear Amir,

The vehicle is used partly for official and partly for personal use

Amir (Learner) (4016 Points)
Replied 13 January 2010

Dear Vinod,

Fatema is rite...

Case 1

If Co.(i"employer) is paying only Rs. 4,000/- then

Engine capacity : upto 1.6 litre - Rs.2,700 per month

Engine capacity : exceeds 1.6 lite - Rs.3,300 per month

Case 2

Actual Expenses less Rs. 3,300 per month (or Rs. 2,700/month in case of engine capacity is upto 1.6 Litres)

Vinod Nayak (Regional Manager - Finance) (69 Points)
Replied 13 January 2010

Here the driver's salary is reimbursed to the employee, the company does not pay directly to the driver.

Even then if the computation is same mentioned, then the employee owning the car will be taxed more i.e., Rs.3,100 p.m. (Rs.4,000- 900 in this case) where as in the first case, the employee will be taxed only on Rs. 900 pm. even though he is reimbursed the same Rs.4,000 p.m.

Please clarify

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Amir (Learner) (4016 Points)
Replied 13 January 2010

Dear Vinod,

It doesnot make any difference who is directly paying to the driver, in nutshell co. is bearing the driver;s cost...

And what u have written after that I didn't get anything...From where u have come to 3,100 or 900

Vinod Nayak (Regional Manager - Finance) (69 Points)
Replied 13 January 2010

Let me make it clear,

Case 1:

The company provides the car to the employee, also reimburses Rs.4,000 p.m towards driver's salary.

Case 2:

The car is owned by the employee. Repairs and Maintenance of Rs. 2,000 p.m and driver's salary of Rs.4,000 p.m. reimbursed to the employee

The car is used both for official and personal use.

What would be the perquisite?

Amir (Learner) (4016 Points)
Replied 13 January 2010

Originally posted by : Amir
	Dear Vinod, Fatema is rite... Case 1 If Co.(i"employer) is paying only Rs. 4,000/- then Engine capacity : upto 1.6 litre - Rs.2,700 per month Engine capacity : exceeds 1.6 lite - Rs.3,300 per month Case 2 Actual Expenses less Rs. 3,300 per month (or Rs. 2,700/month in case of engine capacity is upto 1.6 Litres)

2 Like

Aravind.. (CA) (1262 Points)
Replied 14 January 2010

AMIR IS CORRECT......

CA Manish Mohnot (Charterted Accountant) (146 Points)
Replied 14 January 2010

If company does not provide driver's salary to employees and employees is giving driver salary to driver then employees can claim driver salary from taxable perquisits??