Pros and Cons of Company Leased Car


Thread Starter #1
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Hi All,

Please share your experience about Company Lease Car, I believe Senior or Mid Manager level IT folks can definitely able to share their experience about Company Lease Cars.

I have booked the Car and expecting delivery by Jan 2013.

My questions are:

1: Will the car purchased in the name of Employer or Employee.

2: What exactly is pre-requisite amount and on what basis it is decided?

3: As I got to know that yearly paid EMI will not be taxable, hence it's a great relief along with HRA and Home Loan Interest.

4:Is the Interest Rate same if we purchase the Car in normal ways.

5: Please list out if there are any drawbacks?

Thanks,
Alok
 
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Re: Pros and Cons of Company Lease Car

Alok, as per my knowledge i am able to answer some of your questions.

1. The car will be purchased in the name of Employer.
2. check with your company administration
3.-
4. No. In my company,earlier, it was our company purchase the car as per the quote employee gets from the dealer. Now we have 3 vendors like Kotak, L&T and Religare.Employee can select the vendor as per the EMI,rate & service.
5.need to close, once you resign from the company or going for onsite
 
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Re: Pros and Cons of Company Lease Car

As per company car scheme in my company,

1. Car will be purchased in employer's name.
2. I think you mean perquisite amount and not pre-requisite amount. Perquisite amount is the residual value of car at at the end of lease period and is calculated as per IT department guidelines. Employee has to pay perquisite tax on perquisite value of the car when car is transferred from company's name to employee's name at the end of lease period.
3. EMI amount is not taxable and this results in a substantial tax saving.
4. Interest rate may vary from one company to another.
5. Drawbacks:
5.1 Most states levy significantly higher RTO tax on cars registered in corporate name. For example, in Gujarat, RTO tax is 6% for cars registered in individual name as compared to 12% when registered in company's name.
5.2 Employee needs to buy back the car if he resigns before end of lease period. This involves arranging substantial cash in a short time.
5.3 Generally, interest rate is less when car is purchased in individual name. For example, SBI is giving car loan at 10.75% p.a. on daily reducing balance as compared to 12% p.a. on monthly reducing balance charged for company lease. Also, there are no pre-payment charges in SBI car loan.
 
Thread Starter #4
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Thank you for the detailed reply, so is there any extra depreciation during resale time.

Another question: about tax exception on Fuel expenses, do we have any hassles while getting the bills from petrol bunks at Bangalore, my monthly expenses are more than company allowed limits.

Say for Rs3000 I need petrol bills of my 2wheelar that's going to be actual cost but can I ask the bill for my Car (Spark which I rarely use).

Vibhor: Please delete this email if there is any violation as I am not intended to promote some sort of tricks for tax exemptions.
 
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