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Salary

neha (student) (28 Points)

30 January 2016

I have a query regarding Valuation of perquisite that an employee owns a car of 1.8 cc capacity which he uses for official as well as personal purpose and claim to spent whole of conveyance allowance of Rs. 36000/-. The Assessing officer had agreed that 35% of the time car is used for personal purpose. what will be the value of perquisite of motor car and whether conveyance allowance will be fully taxable ?

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2 Replies

Aditi Bhardwaj (Practising Chartered Accountant & Mentor for CA students) (659 Points)
Replied 01 February 2016

If the motor car is owned by the employee but the actual running and maintenance charges are met or reimbursed by the employer, and the motor car (of an engine capacity of above 1600 CC) is used partly for official and partly for private purposes, then:

Taxable perquisitie = Actual expenditure incurred by the employer Minus Rs. 2400/-(plus Rs. 900/-, if chauffeur is also provided) per month

In your case, taxable perquisite = 36000 - (2400*12) =36000 - 28,800 = Rs. 7200. The percentage of use should not be a concern as long as partly is for official and partly for personal.

Hope the above clarified.

Best regards

Aditi