Car having cubic capacity of engine not exceeding 1.6 liters owned or hired by employer provided to the employee for use wholly for private purposes of which running and maintenance expenses are being borne/ met by the e

CS Executive · Tax Laws and Practice · PYQS · December 2020
Car having cubic capacity of engine not exceeding 1.6 liters owned or hired by employer provided to the employee for use wholly for private purposes of which running and maintenance expenses are being borne/ met by the employee than find out from the following as to value chargeable to tax in the hands of employee as a perquisite :
(A) It is not a perquisite, hence not taxable
(B) Value of 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 taken at ₹600 p.m. and at ₹900 p.m. if chauffeur is provided.
(D) Value of perquisite shall be the actual expenditure incurred by the employer plus normal wear and tear @ 10% of the cost of car or hire charges if car is taken on hire.

Answer & Explanation:

Correct Answer: Option (B)

Official answer key: (B).

Topics: Income from Salaries

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