Dear Sricma,
I hope your taking of car in this particular question.
1) If the car is owned by the company -
a) Given to senior manager for official purpose only: The entire expenditure on running,maintenance,fuel,drivers salary and also including depreciation as per IT, will be FBT deemed to have been provided by the company to its employee (i.e. senior manager) and accordingly 20% of such entire expenditure will be the value of FBT which will be taxable at the rate of 30% ( +sc+ec)
b) Given to senior manager for private purpose only : Even then, the entire expenditure as mentioned at (a) above will be the FBT deemed to have been provided by the company to its employee, and accordingly 20% of such entire expenditure will be the value of FBT,which will be taxable at the rate of 30% (+sc+ec)
NOTE : IT IS NOT TAXABLE IN THE HANDS OF EMPLOYEE AS PERQUISITES, AS RULE 3(2) HAS BEEN OMITTED
2) If the car is owned by the employee :
Reimbursement of car expenses to employees on the basis of bills submitted is liable to FBT as per CBDT EXPLANATORY NOTE NO.78, which I reproduce for you.
"The reimbursement in respect of car expenses on the basis of bills submitted and driver's salary on the basis of declaration provided fall outside the scope of salary within the meaning of clause (1) of section 17 ot the Income Tax Act. Therefore,any expenditure towards such reimbursement is effectively expenditure incurred by the employer for the purpose of conveyance,tour and travel .Since the expenditure for such reimbursement is for the purpose referred to in clause (F) of sub section (2) of section 115WB relating to conveyance,tour travel, and is liable to FBT".
Thanks & Regards,
MANJUNATH
CAclubindia
