After abolition of the FBT tax from

Financial year 2009-10 ,now many perks

are again taxable in the hands of the
employees again .Car facility is one of
the them .There is always a confusion
among the employer as well as in the
employees that how to value the facility
of car provided to the employee .Income
tax rules has provided the method to
value such perks .The table is provided
as under .Please do note forget to read
the note given under the table .In simple
terms where car is used for official
purpose ,there is no perk value to be
added and where car is used for private
purpose only full expense cost including
driver salary and depreciation @ 10 %
will be added (where car owned by
employer ) will be value of perks.In third
case where car is used partly for official
and partly for official purpose in that
case rate has be specified per rules and
now there is no role of estimate from
employer or from Assessing officer side
Valuation of perquisite in respect of motor car:

Private purpose Official Purpose

Car owned by the employee and expenses met by him

Not a perquisite Not a perquisite

Car owned by the employee and expenses are reimbursed by the employer

Actual expenses of employer Not a perquisite(see Note-1)

 Not a perquisite(see Note-1)

less: amount recovered from the

employee

balance amount will be perquisites in

employee's hand

Car is owned/ hired by the employer and expenses met by the employer

1.Actual Expenses by employer Not a perquisite(see note-1)

2. Plus depreciation (10% of the original

cost of car)/ hire charges(if car is hired)
3.Less :amount recovered from the
employee

Car is owned/ hired by the employer and expenses met by the employee

1.Depreciation(10 % of the original cost Not a perquisite(see note-1)

of the car)/ hire charges + chauffeur
salary.

2,less : amount recovered from the

employee
Note:1:Conditions to be satisfied if
the Car is used for official purpose :-

The employer has maintained complete

details of journey undertaken for offcial
purpose which may include date of
journey, destination, mileage, and the
amount of exepnditure incurred thereon.
The employer gives a certificate to the
effect that the expenditure was incurred
wholly and exclusively for the
performance of official duties

Content of log book - complete details of

the journey such as date of journey
destination, mileage and amount of the
expenditure incurred.

The priciple of Arms length price will

apply while cars taken from related
parties.
Note:2: where more than one car is
being provided for use for employee
or member of his family then
valuation will be as under

The only car will be valued as partly

used for official purpose and partly for
private purpose

other car will be valued as fully used for

private purpose.

Note:3-Car facility between residence

to office
Car facility between office to residence
and back is not chargeable to tax at all.

Note-4: Vehicle other than Car owned

by employee and running
and maintenance met /reimbursed by
employer

If used for official purpose: full exempt

see note one

If used for private purpose: expense met

by employer fully taxable as perquisites
Partly used for office: find out total
expenses met by employer less 600 per
month (or higher if actual recorded) for
official purpose and less any amount
recovered from employee balance
amount will be treated as perquisite

Note-5: if in any case given above the

amount is negative after recovery
from the employee then valuation of
perquisites will be treated as nil
SOURCE: SIMPLE TAX INDIA

http://www.simpletaxindia.org/2009/12/valuation-of-motor-car-perquisities-ay.html
 Private and official purpose

Not a perquisite

employer

1.calculate actual expenditure on by

employer
 2.less:if car hp < 16, perquisite is
Rs.1200 p.m., if hp>16 Rs.1600 p.m.
with Rs.600 p.m. chauffeur salary. or
higher sum as recorded by logbook by
employer

3.Less :amount recovered from the

employee (if any)

ployer

if car hp < 16, perquisite is Rs.1200 p.m.,

if hp>16 Rs.1600 p.m. with Rs.600 p.m.
chauffeur salary.
 Note :nothing is deductible in respect of
any amount recovered from employee.

ployee

If car hp < 16, perquisite is Rs.400 p.m.,

if hp>16 Rs.600 p.m. with Rs.600 p.m.
chauffeur salary.

Note :nothing is deductible in respect of

any amount recovered from employee.