Leasing of Car – Beneficial or not?

Car leasing when affiliated to company means a commercial finance policy/product. For an ‘x’ amount of money, a car can be leased for a fixed period of time through this vehicle leasing procedure. It is commonly offered by dealers as an alternative to vehicle purchase but is widely used by businesses as a method of acquiring vehicles for business, without purchasing them. Top leasing companies in India offer various services for corporate car leasing in India. If you are a salaried employee working in an MNC or in a private limited company, this article might be a good read for you. MNC’s often offer several perks to their employees and one of them is covering motor car expense.

The added benefits when you use that leased car for official purposes only comes into light meaning the value of perquisite will be NIL and there will be no addition in your taxable salary. There are certain conditions that should be ensured such as the employer should maintain complete details of visits made for official purposes which include - date, the place visited, mileage, and, expenditure. The employer certificate is also compulsory to authenticate that the expenditure was incurred for official purposes.  However, when you are a salaried employee then often there are questions about the tax liability of owning a car and using it for both personal and official purpose. Leasing a company car is undoubtedly more tax efficient than owning a car for salaried employees. Leasing a car differs from a commercial hire purchase, under which the interest and depreciation are tax deductible.

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