Monday, January 30, 2012

VALUATION OF PERQUISITES-PETROL EXPENSES AND MAINT CHARGES


on Monday, January 30, 2012

My office is a Govt of india undertaking,having Industrial pay pattern.Accordingly our employees are being reimbursed the charges for fix quantity of Petrol and fix amount of maintenance charges per month,every employee is supposed to use his own vehicle for official work within a radius of 8 km. one side and no conveyance charges is paid to him.
Please let me know the tax treatment of this payment in light of new perquisites taxabilty provisions.
M.L.JHAMARIA

Employee owned Vehicle ,Partly used for official & party for Personal purpose.
where Motor car/vehicle is owned by employee , in 99.99 % it is being used both for official as per as personal purposes means used exclusively for official purpose is not possible .So I assume here that the vehicle for which reimbursement of expenses has been claimed is used for official and personal purpose.further there is no difference in valuation of such perquisites ,whether vehicle is used with 8 kilometre or more.Further it is also not covered under transport allowance.(fixed 800 Pm exemption u/s 10(14)

Valuation of perquisite in Above case.
New rule has defined a standard amount, which is deemed to be the expenses attributable to official purpose out of total expense /amount reimbursement of amount for Maint. and running charges  .So out of total amount reimbursed to employee such defined amount is to be reduced to get valuation of perquisites .Detail is Given as under.

If Employee owned a Motor Car 

  • Motor Car =<1600CC Total expenses By employer (Petrol bill +Maint charges) minus 1800/-pm.
  • Motor Car >1600CC  Total expenses By employer (Petrol bill +Maint charges) minus 2400/-pm.

If Employee owned as vehicle other than motor car then perks value will be as under.

  • Total expenses By employer (Petrol bill +Maint charges) minus 900/-pm.

However where employee claims that the motor-car/vehicle is used wholly and exclusively in the performance of official duty or that the actual expenses on the running and maintenance of the motor-car owned by the employee for official purposes is more than the amounts deductible (Deemed amount 1800/2400/900 as the case may be) he may claim a higher amount attributable to such official use and the value of perquisite in such a case shall be the actual amount attributable to official use of the vehicle provided that the following conditions are fulfilled:—

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

so If employee can arrange details given above then he can deduct full amount or actual amount and valuation of perks will be reduced to such amount

Example: suppose employer has paid 2000 as maint. charges per month and 3000 as petrol charges to you an you have car less than or equal to 1600 CC
  • Perks will be 5000(2000+3000)-1800=3200 pm .
Suppose in above example ,you have a record of all the journey performed for official expenses and expense on such official journey is amounting to Rs 4000/- ina month
  • In such case valuation will be 5000-4000=1000/pm
but your must have to prepare the records suggested above in notification .