Valuation of perquisites of the Motor car

Introduction

Motor car provided by the employer is a perquisite only for specified employees because it is a facility provided by the employer to employees.

Income taxable under head salaries: Valuation of perquisite on motor car

On the other hand, if the car belongs to the employee and the expenses of running and maintenance of that car are met by the employer, it becomes a perquisite taxable in the hands of employees.

Valuation of perquisite is one of the part for computing taxable value of salary. So if you want to learn the overview of Income taxable under head salaries, then I had attached the link of this post below. Go and read that post for your enhanced learning.

Here is the comprehensive chart displaying how to calculate the value of perquisites on motor vehicles. You must read it till end:

S.No.Circumstances  Where cubic capacity of engine does not exceed 1.6 litresWhere cubic capacity of engine exceeds 1.6 litres
1Where the motor car is owned or hired by the employer and the running and maintenance expenses are met or reimbursed by the employer:
(a)is used wholly and exclusively in the performance of this official duties;No valueNo value
(b)is used exclusively for the private or personal purposes of the employee or any member of the household;Actual amount of expenditure incurred by the employer on the running and maintenance of motor car during relevant previous year including remuneration if any. Any amount charged from employee will be reduced.Actual amount of expenditure incurred by the employer on the running and maintenance of motor car during relevant previous year including remuneration if any. Any amount charged from employee will be reduced.
(c)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.Rs.1800 p.m. (plus Rs.900 p.m. if driver also provided) Rs.2400 p.m. (plus Rs.900 p.m. if driver also provided)
(ii)the expenses on running and maintenance for such private or personal use are fully met by the employee.Rs.600 p.m. (plus Rs.900 p.m. if driver also provided)Rs.900 p.m. (plus Rs.900 p.m. if driver also provided)
2Where the employee owns a motor car but the actual running and maintenance charges are met and reimbursed to him by employer and,
(i)such reimbursement is for the use of vehicle wholly and exclusively for official purposesNo valueNo value
(ii)Such reimbursement is for the use of private or personal purposes of employee or member of householdActual amount of expenditure incurred by employer including driver's salary. Any amount charged from employee will be reduced.Actual amount of expenditure incurred by employer including driver's salary. Any amount charged from employee will be reduced.
(iii)Such reimbursement is for the use of the vehicle partly for official purposes and partly for personal purposes of employee or any member or his household.The actual amount of expenditure incurred by the employer as reduced by Rs.1800 p.m. (plus Rs.900 p.m. if driver is provided)
If actual expenses on running and maintenance for official purpose is more than Rs.1800/2700 p.m., he can claim such actual amount of expenditure. Any amount charged from employee will be reduced.
The actual amount of expenditure incurred by the employer as reduced by Rs.2400 p.m. (plus Rs.900 p.m. if driver is provided)
If actual expenses on running and maintenance for official purpose is more than Rs.2400/3300 p.m., he can claim such actual amount of expenditure. Any amount charged from employee will be reduced.
3Where the employee owns any other auto-motive conveyance but the actual running and maintenance charges are reimbursed to him by employer and,
(i)Such reimbursement is for the use of vehicle wholly and exclusively for official purposes,No valueNot applicable
Such reimbursement is for the use of vehicle partly for official purposes and partly for private purposes of employee.The actual amount of expenditure incurred by the employer as reduced by an amount of Rs.900 p.m.
However if actual expenses on running and maintenance for official purpose is more than Rs.900 p.m., he can claim such actual amount of expenditure. Any amount charged from employee will be reduced.
Not applicable

Motor Vehicle provided by the employer for commuting from residence to office and back

The use of any vehicle provided by an employer for journey by the assessee from his residence to his office, shall not be regarded as a benefit granted to him.

In order words, such use shall not be treated as private or personal use of the employee.

Where more than one motor car is provided

Where more than one motor car are owned or hired by employer and employee or any member of household are allowed the use of such motor car.

Here value of perquisite shall be the amount calculated in respect of one motor car in accordance with item 1(c)(i) of above table.

The amount in respect of other car or cars is calculated in accordance with item 1(b) of above table.

Get the quick learning chart of allowances and perquisites to get the overview of this whole topic.


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