If you are in the market for a new car, you may want to consider a company car lease policy as a way to save up to 50% of the car cost. This may sound too good to be true, but it is a practical scenario that has been proven to work. By structuring your salary in a certain way, you can get a brand-new SUV at approximately half the cost.
Here's
how it works: Let's say you have a Cost to Company (CTC) of Rs. 25,00,000.
After the standard deduction, your net taxable salary will be Rs. 24,50,000,
and you will have to pay Rs. 4,52,400 in taxes. However, if you buy a car worth
Rs. 15,00,000 through your company car lease policy, you can save a significant
amount of money.
Assuming
the car lease rental is Rs. 43,802, the driver's salary is Rs. 15,000, and fuel
expenses are Rs. 10,000 per month, you can include all these expenses in your
salary structure. The total car expense would be Rs. 68,802 per month, adding
up to Rs. 8,25,624 per annum.
As a
result, your taxable salary will be reduced to Rs. 16,24,276, and you will only
have to pay Rs. 1,94,805 in taxes, resulting in a tax saving of Rs. 2,57,595.
Over a period of four years (the car lease period), tax savings would aggregate
to Rs. 10,30,378. After paying a residual value of Rs. 80,000 (approximately 5%
of the car cost) and a margin of Rs. 2,40,000 to the leasing company, the net
savings would be Rs. 7,10,378, or approximately 47% of the cost of the car.
It's
important to note that this example assumes that the car is being used for
office purposes only. If the car is being used for both office and personal
purposes, you will have to pay some tax on the perquisite. However, the tax
saving would still be significant.
At the
end of the leasing period, which could be three, four, or five years, you can
keep the car by paying 5% of the car cost. This means that you will own the
car, similar to buying a car on loan. However, with a lease scenario, you get
the added tax benefit as the lease rent, petrol, and driver reimbursement are
not considered part of your taxable salary.
In
case of a job change during the lease period, you have the option to pay the
balance lease rental and residual value in advance/upfront and own the car
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