Article explains Valuation of Perquisite of Motor Car provided by employer If motor car is owned or leased by the employer and Used exclusively for official purpose or Used for both official and personal purpose or Used exclusively for personal purpose. 

Valuation of Perquisite of Motor Car If motor car is owned by the employee but running and maintenance and driver’s salary reimbursed by employer and Used exclusively for official purpose or Used for both official and personal purpose.

Valuation of Perquisite of Motor Car If Employee owns any other automotive conveyance but running and maintenance is reimbursed by employer and Used exclusively for official purpose or Used for both official and personal purpose.

Motor car as a perquisite is one of the famous perquisites provided by employer. Generally, this kind of perquisite is provided to senior employees of the organization.

The taxation rules of valuation of motor cars as perquisites are as under:

If motor car is owned or leased by the employer

a) Used exclusively for official purpose

If the car is used for only official purpose, it will not be taxable in the hands of employee irrespective of cubic capacity of engine.

Valuation of Perquisite of Motor Car provided by employer

b) Used for both official and personal purpose

i)  If running and maintenance cost is reimbursed by the employer

Cubic Capacity within 1.6 litre – Rs 1,800 p.m. + Rs 900 p.m. (If driver is provided)

Cubic Capacity exceeding 1.6 litre – Rs 2,400 p.m. + Rs 900 p.m. (If driver is provided)

ii) If running and maintenance cost is reimbursed by the employee

Cubic Capacity within 1.6 litre – Rs 600 p.m. + Rs 900 p.m. (If driver is provided)

Cubic Capacity exceeding 1.6 litre – Rs 900 p.m. + Rs 900 p.m. (If driver is vided)

c) Used exclusively for personal purpose

If the car is used for only personal purpose, it will be fully taxable in the hands of employee irrespective of cubic capacity of engine.

The taxable value is as under:

Actual cost of Running and Maintenance of motor car

Plus: driver’s salary

Plus: normal wear and tear @10% per annum of the actual cost of motor car

Less: any charges recovered from the employe

If motor car is owned by the employee but running and maintenance and driver’s salary reimbursed by employer:

a) Used exclusively for official purpose

If the car is used for only official purpose, it will not be taxable in the hands of employee irrespective of cubic capacity of engine.

b) Used for both official and personal purpose

If running and maintenance cost is reimbursed by the employer

Cubic Capacity within 1.6 litre – Actual expenses less Rs 2,700 p.m.

Cubic Capacity exceeding 1.6 litre – Actual expenses less Rs 3,300 p.m.

If Employee owns any other automotive conveyance but running and maintenance is reimbursed by employer

a) Used exclusively for official purpose

If the car is used for only official purpose, it will not be taxable in the hands of employee if cubic capacity of engine is within 1.6 litre.

b) Used for both official and personal purpose

If running and maintenance cost is reimbursed by the employer

Cubic Capacity within 1.6 litre – Actual expenses less Rs 900 p.m.

Cubic Capacity exceeding 1.6 litre – Not Applicable

Republished with Amendments

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