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Valuation of Motor Car / Other Vehicles, provided by the Employer, is a Perquisite for Computing Salary Income only for Specified Employees

As already discussed, motor car/other vehicles, provided by the employer, is a perquisite only for  specified employees because it is a facility provided by the employer to the employees.

 

Who is a Specified Employee [Section 17(2)(iii)]:

 

An employee shall be a specified  employee, if he falls under any of the following three categories: 

 

(i)            he is a Director of a company; or 

 

(ii)           he, i.e. the employee, has a substantial interest in the company.

As per section 2(32), person  who has a substantial interest in the company, in relation to a company means a person who  is the beneficial owner of shares, not being shares entitled to a fixed rate of dividend whether  with or without a right to participate in profits, carrying not less than 20% of the voting  power;

 

(iii)          his income under the head 'Salaries' (whether due from, or paid or allowed by, one or more  employers), exclusive of the value of all benefits or amenities not provided for by way of  monetary payment, exceeds ₹50,000.

Income, for this purpose, shall include all taxable  monetary payments like basic salary, dearness allowance, bonus, commission, taxable  allowances/perquisites but shall not include the value of any non-monetary benefits/  perquisites. The following are to be deducted from salary for this purpose: 

 

(a)          standard deduction to the maximum extent of ₹50,000 (₹40,000 for A.Y. 2019-20)  [Section 16(ia)] 

(b)          entertainment allowance [to the extent deductible under section 16(ii)]; 

(c)           tax on employment [Section 16(iii)].

 

Value of Perquisite per calendar month (Only completed calendar months to be taken) 

 

Sl.  No.

Circumstances

Where cubic capacity of  engine does not exceed 1.6  litres

Where cubic capacity of  engine exceeds 1.6 litres

1.

Where 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 his official  duties;

No value provided that the  documents specified below  this table are maintained by  the employer.

      No value provided that the  documents specified below  this table are maintained by  the employer.

 

(b) is used exclusively for  the private or personal  purposes of the employee or  any member of his  household;

Actual amount of expenditure  incurred by the employer on  the running and maintenance  of motor car during the  relevant previous year  including remuneration, if  any, paid by the  employer to the chauffeur as  increased by the amount  representing normal wear and  tear of the motor car (which  will be 10% p.a. of the cost of  motor car or cars) and as  reduced by any amount  charged from the employee  for such use.

Actual amount of expenditure  incurred by the employer on  the running and maintenance  of motor car during the  relevant previous year  including remuneration, if  any, paid by the  employer to the chauffeur as  increased by the amount  representing normal wear and  tear of the motor car (which  will be 10% p.a. of the cost of  motor car or cars) and as  reduced by any amount  charged from the employee  for such use.

 

(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.

₹1,800 p.m. (plus ₹900 p.m.,  if chauffeur (driver) is also  provided to run the motor car)

₹2,400 p.m. (plus ₹900 p.m.,  if chauffeur (driver) is also  provided to run the motor car)

 

(ii) the expenses on running  and maintenance for such  private or personal use are  fully met by the employee.  Note: When motor car is  provided by employer and  expenses of running and  maintenance expenses for  official use is met by  employer but for private use  is met by employee, it will  be covered by this clause (ii).

₹600 p.m. (plus ₹900 p.m., if  chauffeur is provided by the  employer to run the motor car) 

 

Note: In this case it is not  mentioned in the rule that  amount charged from the  employee should be reduced  from the above value.

₹900 p.m. (plus ₹900 p.m., if  chauffeur is also provided to  run the motor car) 

 

Note: In this case it is not  mentioned in the rule that  amount charged from the  employee should be reduced  from the above value.

2.

Where the employee owns a  motor car but the actual  running and maintenance  charges (including  remuneration of the  chauffeur, if any) are met or  reimbursed to him by the  employer and,—

 

 

 

(i) Such reimbursement is for  the use of the vehicle wholly  and exclusively for official  purposes,

No value provided that the  documents specified below  this table are maintained by  the employer.

No value provided that the  documents specified below  this table are maintained by  the employer.

 

(ii) Such reimbursement is  for the use of private or  personal purposes of the  employee or member of his  household

Actual amount incurred by the  employer on running and  maintenance of motor car  including driver's salary as  reduced by the amount  charged from the employee  for such use.

Actual amount incurred by the  employer on running and  maintenance of motor car  including driver's salary as  reduced by the amount  charged from the employee  for such use.

 

(iii) such reimbursement is  for the use of the vehicle  partly for official purposes  and partly for personal or  private purposes of the  employee or any member of  his household.

The actual amount of  expenditure incurred by the  employer as reduced by  ₹1,800 p.m. (plus ₹900 p.m. if  chauffeur is also provided) 

 

However, in this case, if actual  expenses on running and  maintenance for official  purpose is more than ₹1,800/  2,700 p.m., as the case may  be, he can claim such actual  amount of expenditure as  deduction by maintaining the  documents specified below the table.  If any amount is recovered  from employee the amount so  recovered shall be deducted  from the above valuation.

The actual amount of  expenditure incurred by the  employer as reduced by  ₹2,400 p.m. (plus ₹900 p.m. if  chauffeur is also provided) 

 

However, in this case also, if  actual expenses on running  and maintenance for official  purpose is more than ₹2,400/  3,300 p.m., as the case may  be, he can claim such actual  amount of expenditure as  deduction by maintaining the  documents specified below the table.  If any amount is recovered  from employee the amount so  recovered shall be deducted  from the above valuation.

3.

Where the employee owns  any other auto-motive  conveyance but the actual  running and maintenance  charges are met or  reimbursed to him by the  employer and,— 

 

(i) such reimbursement is for  the use of the vehicle wholly  and exclusively for official  purposes, 

 

(ii) such reimbursement is  for the use of the vehicle  partly for official purposes  and partly for personal or  private purposes of the  employee. 

 

If any amount is recovered  from employee the amount  so recovered shall be  deducted from the above  valuation.

No value provided that the  documents specified below  this table are maintained by  the employer. 

 

The actual amount of  expenditure incurred by the  employer as reduced by an  amount of ₹900 p.m. 

 

However, in this case, if actual  expenses on running and  maintenance for official  purpose is more than ₹900  p.m., he can claim such actual  amount of expenditure as  deduction by maintaining the  documents specified below the  table. 

 

If any amount is recovered  from employee the amount so  recovered shall be deducted  from the above valuation.

Not applicable

 

Vehicle provided by the employer for commuting from residence to office and back  [Explanation to section 17(2)(iii)]:

 

The use of any vehicle provided by a company or an employer for  journey by the assessee from his residence to his office or other place of work, or from such office or  place to his residence, shall not be regarded as a benefit or amenity granted or provided to him free of  cost or at concessional rate. In other words, such use shall not be treated as private or personal use of  the employee. 

 

Conveyance facility provided to the High Court Judges and Supreme Court Judges is not taxable. 

 

Where more than one motor car is provided 

 

Where one or more motor cars are owned or hired by the employer and the employee or any  member of his household are allowed the use of such motor car or all or any of such motor cars  (otherwise than wholly and exclusively in the performance of his duties), the value of perquisite shall  be the amount calculated in respect of one car in accordance with item (1)(c)(i) of the above table as if  the employee had been provided one motor car for use partly in the performance of his duties and  partly for his private or personal purposes and the amount calculated in respect of the other car or cars  in accordance with item (1)(b) of the above table as if he had been provided with such car or cars  exclusively for his private or personal purposes.

 

 

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