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,— |
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(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. |
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(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. |
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(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,— |
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(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) |
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(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,— |
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(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. |
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(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. |
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(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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