Vehicle Maintenance Allowance

Page no : 2

chintan (Chartered Accountant) (33 Points)
Replied 05 August 2008

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I am getting a Vehicle allowance every month from my company, question, can I claim all my vehicle maintance fee's like oil changes and mile check ups to the IRS

Stan

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IS VEHICLE ALLOWANCE PAID TO EMPLOYEE HAVING HIS OWN VEHICLE CAN BE EXEMPTED FROM IT AFTER SUBMITTING VEHICLE MAINTENANCE PROOFS.

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Originally posted by :Pravin Kumar Saharia
"	Whether Vehicle Maintenance Allowance is eligible for any deduction under income tax granted to employee by employers	"

Rajesh (Asst. Mgr. Finance & Accounts) (23 Points)
Replied 29 December 2009

Hi,

We are paying (f.y. 2009-2010 a.y. 2010-2011) Vehicle Maintenance Allowance to our employee INR 15000/- p.m. (i.e. 1,80,000 annually). If he submits Petrol & Maintenance bills? will he be eligible go get exemption from Tax?

Kindly let us know on priority with Rule details etc.

Thanks & kind regards,

Rajesh

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Amit Kr. Mishra (Executive (Accounts)) (47 Points)
Replied 15 August 2010

Hello Mr Rajesh!

Tell me one thing, you are paying him 15k per month and if he submits bills for 14k, are you gong to demand the unspent balance of Allowance i.e. 1000/- from this employee? Ofcourse not, I guess.

What you are paying is an allowance and not an perquisite. The Vehicle Maintainance Allowance is taxable fully in the hands of the employee. Its not material whether he submits bills or not.

If any employer reimburses the amount spent on vehicle maintenance by the employee, then it is considered as perquisite and is not taxable upto the extent it is used for official purpose, provided the employer maintains complete log of the journey, destination mileage etc and amount of exp incurred thereon; and gives a certificate that the expenditure was incurred wholly and exclusively for the performance of his official duty.

BUT this does not hold good in your case as your are giving him an Allowance and in this case, the amount will be taxable in full in the hands of your employee.