When a car is owned or hired by the employer and its running and maintenance expenses for private use are met by the employee and if the car is used to be partly for official duty and partly for private purposes (where t

CS Executive · Tax Laws and Practice · PYQS · December 2021
When a car is owned or hired by the employer and its running and maintenance expenses for private use are met by the employee and if the car is used to be partly for official duty and partly for private purposes (where the cubic capacity of the engine exceeds 1.6 It) then how much perquisite is chargeable to tax in the hand of the employee ?
(A) ₹900 p.m. plus ₹900 p.m. if chauffeur is also provided.
(B) Value of the perquisite shall be 10% of the actual cost of car or hire charges if car is taken on hire plus salary of chauffeur, if any, paid or payable by the employer.
(C) Value of perquisite shall be ₹600 p.m. plus ₹900 p.m. if chauffeur is provided
(D) Value of perquisite shall be actual expenditure incurred by the employer plus normal wear and tear @10% or hire charges if car is taken on hire then deduct amount recovered from the employer.

Answer & Explanation:

Correct Answer: Option (A)

Official answer key: (A).

Topics: Income Tax Act, 1961

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