Perquisite is a part of gross salary of an individual provided by his employer in addition to the basic salary.  It is the benefit in addition to the basic salary to which the employee has a right by virtue of his employment. One of the perquisites provided by the employer is motor car facilities. Valuation of motor car perquisite depends upon the purpose for which it is provided.

When the motor car is used exclusively for business purpose

Where the motor car is owned or hired by the employer and it is used by the employee for business purpose only, then there shall be no perquisite.

When the motor car is used exclusively for personal purpose

Where the car is used for exclusive personal purpose, the perquisite shall be total of:

• Amount of expenditure incurred by the employer on maintenance and running of car.
• Amount paid to driver
• 10% of actual cost of the car.

When the motor car is used partly for business & partly for personal purpose

In such case, the value of perquisite is as follows-

Motor car owned or taken on hire by	Expenses met by	Value of Perquisites
		Capacity upto 1.6 ltrs	Capacity above 1.6 ltrs
Employer	Employer	1,800	2,400
Employer	Employee	600	900
Employer	Employee	Expenses – 1,800 or actual expenses for official use(if proper documents are maintained)	Expenses – 2,400 or actual expenses for official use(if proper documents are maintained)

In addition to above, the perquisite value shall be increased by Rs. 900 if driver is also provided to run the motor car.

Where one or more cars are provided by the employer, the value of perquisite shall be the amount calculated as if one car is used partly for the official use or partly for the personal use and all the others cars for personal use.

Please note that while calculating the perquisite value only completed months shall be taken into consideration and part of the month shall be left unconsidered.

We at Taxmantra.com have the expertise to guide you in lowering your tax outgo and thus enhancing your total take away.  We at Taxmantra.com provide full year support solving all your tax issues, in addition to filing of your return of income with excellent tax planning.

Please join us now in pursuit of simplifying individual taxation!

Alok Patnia

Founder and Director at Taxmantra.com