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VALUATION OF PERKS

CA Vishal (CA working in industry) (620 Points)

22 December 2009

As you would all be aware that new notification for valuation of perks , I want clarity on valauation for reimbursement of fuel expense for car. eg if car is owned by employee and the company pays fixed amount Rs 10,000/- p.m as reimbursement of fuel exp which is part of employee CTC. I want to know what would be tax treatment in the context of new valuation . Also what document should be maintained by the employer.

Please elt me know the taxability in all the three fronts officail use, partly official,partly personal. If car is owned by the company what is tax treatment ?

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3 Replies

CA and CS Pradeep K Jain (service) (31 Points)
Replied 22 December 2009

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(ii) 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 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.

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Mayank kharbanda (Risk Advisory Services) (409 Points)
Replied 24 December 2009

Where the car is used for wholly and exclusively in the performance of his official duties;

Nil value shall be taxable Provided that the documents specified in clause (B) of this sub-rule are maintained by the employer.

Where the car is used for wholly private use then the whole 10,000 would be taxable in the hands of employee.

Where the car is 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;

as in your case then-

Car capacity less than 1600cc

Rs. 1,800 (plus Rs. 900, if chauffeur is also provided to run the motor car)

Car capacity more than 1600cc

Rs. 2.400 (plus Rs. 900, if chauffeur is also provided to run the motor car)

Mayank kharbanda (Risk Advisory Services) (409 Points)
Replied 24 December 2009

in the first case the employee has to maintain complete details of journey undertaken for official purpose which may include date of journey, destination, mileage, and the amount of expenditure incurred thereon;